The Office of Fair Trading last week won the first stage of its test case on bank charges after the High Court ruled that such charges can be assessed for fairness.
Mr Justice Andrew Smith agreed that the charges are covered by rules governing the Unfair Terms in Consumer Contracts Regulation 1999.
A further court hearing scheduled for May 22 will outline the timetable for the next stage of the test case where the court will decide whether the charges are unfair and, if so, what a fair charge should be.
An OFT statement says: “This is an important early milestone for our investigation into this area of high consumer interest. We are now analysing the implications of the judgment for our overall investigation into the fairness of the terms.”
Which? personal finance campaigns manager Doug Taylor welcomes the High Court ruling and calls on banks to concede defeat.
He says: “The banks should do the right thing now, concede defeat, agree with the OFT what constitutes a fair unauthorised overdraft fee and refund their customers as soon as possible.
“If they appeal, drag their heels in refunding their customers or try to introduce back-door charges to recoup their losses, their customers will see this as adding insult to injury.”
However, the judge agreed with the banks that their charges are not “unenforceable penalties” and that fees advertised in their terms and conditions can be charged.
Complaints against charges will remain on hold until the final judgment is made.
Liberal Democrat Shadow Chancellor Vincent Cable says: “Banks can receive unrivalled guarantees and support from taxpayers when things go wrong but continue to make huge profits at the expense of their customers.”