Banks have won the legal battle against the OFT investigation into overdraft charges.

In a ruling today (25 November), the Supreme Court has decided that bank overdraft fees are fair, to the disappointment of millions of UK bank customers.

The decision has come as a surprise to many consumers as it overturns earlier court rulings that allowed the Office of Fair Trading (OFT) to launch investigations into bank charges for unauthorised overdrafts.

An OFT market study in 2008 discovered that banks earn around a third of their retail revenues from unarranged overdraft charges that are difficult to understand.

The news will disappoint millions of people in the UK who are part of a consumer reclaiming campaign and have been waiting since 2007 to recoup their cash.

Martin Lewis from MoneySavingExpert.com 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.”

However, Martin Lewis says that there is still hope for people wanting to reclaim bank charges. He said: “The fact that consumers are being charged £1,000s a year is simply unfair in any language. This may be a setback for reclaiming but it is not the end.”

Banks would have been liable to pay back an estimated £2.6 billion of annual income had they lost the appeal.

Seven banks and one building society appealed against the previous rulings that would have let the OFT scrutinise overdraft fees.

Supreme Court President Lord Phillips justified the decision by stating “that in the absence of the charges the banks would not be able profitably to provide current account services without a fee.”

Lord Phillips did however point out that the bank charges might still be open for investigation by the OFT on other grounds.

The British Bankers’ Association (BBA) released a statement after the ruling: “The Banks acknowledge the unanimous decision of the Supreme Court to allow their appeal in respect of these charges.

“We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties.”

The OFT has expressed its disappointment at today’s ruling and has said “it will now consider the detail of this judgement before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms.”