So have the banks won?

What amazing timing!

Barely a day after we learn of how the taxpayer offers covert cheap overdrafts to the banking system of tens of billions, we now discover that the same banks have every right to charge their customers ludicrous sums for even the tiniest of overdraft errors.

I wonder how much Mervyn King charged Fred the Shred and Andy Hornby for the letter confirming their covert £62bn loan. £30?

It’s been a curious day down at the Supreme Court. The banks have won on a technicality.

The OFT is now not allowed to investigate these charges on the basis that they are bad value for money, that they are excessive.

That, section 6.2 of the Unfair Terms in Consumer Contracts Regulations, has been ruled out of bounds in this case. Unfortunately for the vast majority of people who downloaded identikit letters from a myriad of consumer websites, section 6.2 was the basis of their complaint.

The banks are publicly playing nice.

Privately, they are saying almost all of those cases that involve an identical letter will be dismissed out of hand.

Yes they did refund £559 million of charges to quick-off-the-mark complainants before the claims were frozen. But I’m told those were ‘goodwill gestures’ that will not have to be repaid, but should be considered as history.

But this is not the end of it.

The detail of the Supreme Court judgement contains many sources of comfort for aggrieved overcharged bank customers, even though it wasn’t the precise subject of the judgement.

One Justice told the banks they were engaged in a ‘Reverse Robin Hood’ exercise, fining an unlucky 12 million customers a total of £2.6 billion a year, a third of total current account revenues, in order to subsidise fee-free banking for 42 million other customers.

Practically too, there seemed to be tacit encouragement for the OFT to proceed with an investigation on the basis that the charges are ‘unfair’ rather than poor value for money. The opinions seemed to suggest that such an approach would immediately be referred up to the European Court of Justice.

There was also some implicit criticism of the government for their threadbare interpretation of a key EU directive in 1999. Had the UK government supercharged this directive in the same manner as other European countries, the Justices believe they may have had grounds to refuse the banks’ appeal.

So the OFT is left with an unenviable task of deciding whether to pursue this case still further, via a slightly different route.

What is clear, is that this is a very big deal for the banks. I understand that so big were the feasible payouts, that financial authorities thought they could become an issue of financial stability. Discussions on appropriate levels of bank capital were influenced by likely outcomes of this case.

All this means that the OFT decision next month may well be the subject of political pressure.

Such considerations saw the OFT set aside its competition concerns over Lloyds takeover of HBoS.

It’s all in the pot for the next few weeks. Small wonder that the Treasury is anxiously angling for a voluntary agreement to settle this issue.