An appeal by eight banks attempting to overturn a previous High Court verdict giving the OFT the right to decide if bank charges are fair or not has been quashed.
The case, between of the Office for Fair Trading and eight of Britain's biggest banks, has been raging in the courts since 2007, with the issue being brought to the Court of Appeal at the end of last year.
In April 2008, the High Court ruled in favour of the OFT, with the judge, Mr Justice Andrew Smith, declaring the organisation does have the power to apply consumer contract regulations to decide on the fairness of bank overdraft charges.
However, the seven banks and one building society involved in the test case appealed this decision, leaving customers in the process of reclaiming unfair charges in limbo.
At the end of 2007, the Financial Services Authority (FSA) put a waiver in place that removes the obligation of banks to deal with complaints and refund requests surrounding unauthorised bank charges until a final decision is reached. This waiver was recently extended until July 2009.
The decision has been welcomed by consumer groups. Peter Vicary-Smith, chief executive of Which?, says banks should now "throw in the towel".
"This case has been going on too long and it’s about time they tried to regain some of their dignity and paid customers their dues," he adds. “This whole saga has severely damaged the banks’ reputations. If they try to appeal in the face of such a clear decision, they will suffer further losses in the court of public opinion.”
People waiting to reclaim bank charges still have a wait on their hands. Andrew Hagger, spokesman for Moneynet.co.uk, says: "Unfortunately while the OFT carries out further investigations the teetering piles of claims will continue to gather dust in bank head offices rather than provide the windfalls that so many consumers desperately need."