What a bunch of gangsters the banks really are,” Sir Alan Sugar once opined.

The entrepreneur-turned-TV star tends to have his finger on the public pulse. Yesterday’s High Court ruling did not quite compare the banks with the Mob. But the judge will be cheered for clearing the way for a full investigation into bank charges.

Who has not felt the blood boil when a simple letter from the bank comes with a £35 fee? Greater transparency is part of the answer. Banks should be more straightforward, honest, even.

A £35 charge for an unauthorised overdraft is easier to justify as a penalty for breaking a banking contract than for writing a letter. A £35 fee can legitimately be used to offset the costs of providing the cash, and ensuring it is repaid. Penalties can be used by banks as tools to encourage responsible borrowing. But bank charges of this sort must not, surely, be considered as profitable business.

Customers would benefit if they could choose, before the event, between having unauthorised payments refused, or paying a previously agreed fee for breaching an overdraft limit.

Reform would have drawbacks. If banks’ income from such charges fell there is a good chance that other charges would rise. Free banking could become a thing of the past. But open and honest customer relationships would encourage more competition among banks – they might charge less, or decide to ignore slip-ups that were speedily rectified.

Greater openness would also make it easier for customers to take a leaf from Sir Alan’s book: they would be much better placed to hire and fire their bankers.

david.wighton@thetimes.co.uk

Times Recommends

• Brown targets fat cats after nationalising banks
• US shares soar on global banking rescue
• Europe follows Brown to head off meltdown