The Appeal Court gave the green light to an OFT investigation of the penalty fees, against the wishes of banks.
An Appeal Court ruling has been welcomed by bank customers who are currently reclaiming overdraft charges from banks.
The judges upheld an earlier High Court verdict today, which allows the Office of Fair Trading (OFT) to investigate whether or not the penalty fees are fair. The charges - which commonly came to £30 a time for offences such as contravening overdraft limits - has become the subject of a consumer revolt.
Tens of thousands of penalty charges claims were flooding the court system by mid-2007 and were frozen when the High Court test case was called. Ultimately, if the verdict goes against the banks, billions of pounds in refunds could be paid out on these claims.
The OFT, which now has the green light to investigate the fees thanks to the Appeal Court verdict, is thought likely to rule in bank customers' favour. However, the banks can launch a second court case on the matter even if this decision is reached - leaving the claimants in limbo once more.
Talking to the BBC, Chris Warner at consumer group Which? commented: "It is great to see the Court of Appeal being so unequivocal in their guidance to the banks that this is the end of the road."
He added: "The banks have the right to appeal to the House of Lords but the Court of Appeal could not have been clearer that that is not the appropriate way to go forward."
