The Supreme Court has ruled in favour of high street banks over unauthorised overdraft charges.Its decision will disappoint tens of thousands of customers whose refund claims were frozen while the test case went through the courts.

The challenge was brought by seven major banks and a building society against High Court and Court of Appeal decisions that such charges came under "unfair contract" rules and were therefore subject to regulation by the Office of Fair Trading.

Handing down the unanimous ruling 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 who go into unauthorised overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment. Campaigners claim the actual cost to the banks could be as little as £2.50.

If the banks had lost the test case, it could have cost them £2.6 billion a year in lost revenue and led to their having to make refunds of up to £1 billion.

Copyright © Press Association 2009

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