Banks win overdraft fees battle.

Summary: High Street banks have won their legal appeal over unauthorised overdraft charges, dealing a blow to hundreds of thousands of customers.

High Street banks have won their legal appeal over unauthorised overdraft charges, dealing a blow to hundreds of thousands of their customers.

Their refund claims, some of them running to thousands of pounds, had been frozen pending the ruling from the Supreme Court.

Seven major banks and one building society had challenged earlier High Court and Court of Appeal decisions that the charges came under "unfair contract" rules, and are therefore subject to regulation by the Office of Fair Trading (OFT).

The judges concluded unanimously that the fees did not fall within the rules, although Lord Phillips, president of the Supreme Court, said: "It may be open to the Office of Fair Trading to assess the charge under other criteria."

Customers have criticised the fact that they can be charged Au35 or more for a single bounced payment when they go into unauthorised overdraft or breach their agreed limit. Campaigners claim the actual cost to the banks could be as little as Au2.50.

If the banks had lost the test case, it could have cost them Au2.6 billion a year in lost revenue and led to their having to make refunds of up to Au1 billion.

Before refund claims were frozen, banks had already paid out more than Au559 million to customers who complained about "rip-off" overdraft charges.

The test case was brought jointly by the OFT and Abbey, Barclays, Clydesdale, Halifax Bank of Scotland and Lloyds TSB, HSBC, RBS and Nationwide.

Independent Television News Limited 2009. All rights reserved.

Independent Television News Limited 2009. All rights reserved.

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