What they’re saying: the Supreme Court bank ruling

The Supreme Court dealt a major blow to millions of consumers this morning as it ruled in favour of the high street banks in a test case brought by the Office of Fair Trading (OFT) about 'unfair' charges. 

The judgment, the most high-profile yet from the month-old Supreme Court, reverses the results of more than two years of litigation in lower courts, which had previously found in favour of the OFT's right to investigate the fairness of the banks' charges for unauthorised overdrafts.

Today's ruling found in favour of the seven banks and a building society - Abbey National, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and the Nationwide Building Society - which had challenged the OFT.

‘This will not close the door on the OFT's investigations’

One of the five justices who heard the case, Lady Hale, said: "The banks may not be the most popular institutions in the country at present, but that does not mean that their methods of charging for retail banking services are necessarily unfair when reviewed as a whole." Her colleague Lord Phillips, the Supreme Court's president, pointed out that customers agreed to charges when they signed up to the terms of a current account.

But he warned the banks that further legal action could still be forthcoming against them. "This will not close the door on the OFT's investigations and may well not resolve the myriad cases that are currently stayed [put on hold] in which customers have challenged the relevant charges."

Consumer groups were furious with the ruling, with Malcolm Hurlston, chairman of the Consumer Credit Counselling Service, telling the Daily Mail that "it is a scandal that the costs of banking fall unfairly on people in debt and the improvident and (we) call on banks to charge more transparently."

Martin Lewis of the Money Saving Expert website, who had led the campaign against the charges, said: "Today's decision is a shock and disaster for millions of consumers waiting to get their charges back. As both the High Court and Court of Appeal have previously decided in consumers' favour, this shows it was never a fanciful attempt to reclaim unfair charges.

"The fact that consumers are being charged thousands of pounds a year is simply unfair in any language. This may be a setback for reclaiming," he concluded defiantly, "but it is not the end."

WHAT THEY'RE SAYINGAngela Night, British Bankers Association: "The banks are mindful of their customers, they know the concerns of those who have paid the unauthorised overdraft fees and those who have not. Individuals can avoid any charge by putting their overdraft arrangements in place first."

Peter Vicary-Smith, chief executive of Which?: "This is a bitter blow... Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance. The OFT and the government should now explore other avenues it can pursue to get a fair deal for consumers."

Michael Rea, Head of litigation at London solicitors Dawsons: "Today's decision is a hammer blow to the OFT and signals the end of the road when it comes to investigating bank charges on behalf of the public. Consumers now have the option to pursue individual claims against the bank, but this would be extremely costly and time consuming.

Sarah McCarthy Fry, Exchequer Secretary to the Treasury: "While the decision on past charges has not gone in favour of consumers, we are determined to ensure the system is made fairer in the future. The Government will work with the OFT and Financial Services Authority to reach a new framework for fairer bank charges going forward."

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