The part-nationalised bank has been accused of religious discrimination over the disparity between overdraft charges on its standard current account and its Islamic account.
The Islamic account was set up by the high street bank to attract Muslim customers by allowing them to keep faithful to their religion.
Sharia law does not permit the payment of interest so the 'typical' Islamic account at Lloyds TSB has been set up without an overdraft facility.
If a Muslim customer who has insufficient funds in the account tries to make a payment, it is blocked and a 'return item fee' is charged.
However, on some Islamic accounts such a payment is authorised and an 'unplanned overdraft fee' of £15 is then levied.
The bank says this is a management fee, not a payment of interest, so does not contradict Sharia law.
Meanwhile, customers with standard current accounts who go into the red by at least £100 without authorisation are hit with an 'unplanned overdraft fee' of £20 a day for a maximum of ten days. This could mean a customer has to pay £200 in one month.
The Islamic account is available to all customers at Lloyds TSB. In theory, anyone who does not need a permanent overdraft facility could switch to this account to avoid being hit by interest charges for going into the red.
The disparity between the two accounts emerged after the bank sent its customers a booklet this month explaining its charges. Read more here ...