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The ongoing saga of reclaiming bank charges, levied on unauthorised overdrafts for poor debt management, has been dealt a cruel blow today in the Supreme Court.

Earlier rulings in favour of the Office of Fair Trading’s investigation into the unfairness of unauthorised overdraft fees, have been overturned by a Supreme Court judgement.

The case at stake, which has been running for over two years, has been welcomed by banks Рit allegedly brings an extra ¬£2.6bn of income each year for them.

Campaigners against the unfair charges have been dismayed with the ruling, and the OFT are likely to challenge the decision by using other powers, such as instigating a full Competition Commission enquiry, to attack the overdraft fees.

In explaining his ruling, Lord Phillips the Supreme Court’s president said that customers had agreed to pay overdraft charges as part of the price of having a current account, so they fell outside the scope of the appropriate regulations.

Lord Phillips added that the OFT could still try to scrutinise bank charges under other parts of the regulations and that this was not the end of the matter.

He said: “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.”

In response to the ruling the OFT said that it was “disappointed” with the judgement.

In a statement they said: “The OFT will now consider the detail of this judgment before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms.”

Ivan Cooper, Chairman at debt advice specialists Chiltern said: “This is a devastating blow to consumers who believe that they have been unfairly charged for their poor debt management.

“If anything, it should kick-start people to ensure they avoid any extra charges by putting adeqaute overdraft arrangements in place.

“For people who are still struggling to manage their current finances may be best advised to seek impartial debt help from a reputable provider – like Hamilton Locke, The Debt People or Chiltern.”

People who received payments from banks prior to this test case starting will be allowed to keep their money, because the pay-outs were made as “goodwill gestures”.

Debt management misery as banks win at Supreme Court is a post from: TheDebtPeople.co.uk