Firstly, charges refunds are on hold until the OFT have completed their test case. That will be well into next year.
Secondly, HSBC now charges overdraft arrangement fees, not 'fines'. This was advised about 6-8 months ago. If you choose to go past your limit, you are requesting the bank honour that. This is an 'informal' overdraft. A decision is taken and if you've not requested another overdraft increase, formal or informal in the past 6 months, no arrangement fee is passed, otherwise there is a £25 arrangement fee. The HSBC netwok of ATM's now even warn you if this is going to happen. See
here
at the end of the day, it isn't your money, it belongs to the bank - not you. Don't want charges? Don't go overdrawn - simple. If you aren't capable of managing your finances, get a basic/cardcash account. These WON'T let you go overdrawn and only let you draw £200/day from an ATM. It's your choice really.
Smaller fes or whatever terminology you wish to use woudn't owrk - if £25+ per time doesn't make you respect your overdraft limit, would £3-£10? Unlikely. It would just lead to people just flouting their limits much more so than now. To me, I would allow people to request that as soon as it goes 1p over limit, the item is returned regardless with no fee. 3 returns and the item is cancelled. If you try o use the ATM and don't have enough money, tough.