More than half a billion pounds of charges have been reclaimed

The Office of Fair Trading (OFT) believes the overdraft charges levied by banks and building societies are unfair and wants the High Court to rule accordingly.

However, the banks insist their fees are legal.

What exactly is the High Court being asked to decide?

The OFT is challenging seven leading banks and the Nationwide Building Society about the fairness of their unauthorised overdraft charges.

Customers are sometimes charged more than �30 for going into the red without permission, an amount which the OFT and consumer groups argue is significantly higher than the true administrative cost.

However, the OFT will not ask the judge to make a straightforward ruling that the banks' charges are unfair.

BANK REFUNDS IN 2007 Barclays - �87m HSBC - �116m HBOS - �79m Lloyds TSB - �36m RBS - �81m Source: Bank interim results

Instead it will argue that the overdraft charges come under the scope of the 1999 Unfair Terms in Consumer Contracts Regulations.

This would mean the OFT would have the authority to decide itself if the charges are unfair, and the power to force the banks to change their practices as a result.

The regulator will also argue that the banks' terms and conditions are not written in sufficiently plain English, something else that would give the OFT jurisdiction to act.

For their part, the banks argue that their charges are a fee for a service and not a penalty charge, and also that they form a core term of their contracts with their customers.

As such they say the Unfair Terms legislation does not apply.

Why has the case reached the High Court?

The test case was announced last summer, in response to an unprecedented wave of mass litigation which has swept the country during the past two years.

It is estimated that banks have so far refunded about �570m to 330,000 customers who accused them, often through local court proceedings, of imposing excessive overdraft fees that were unfair and illegal.

In the vast majority of cases the banks chose to settle the cases before the matter reached court. This has meant no legal precedent was been set.

But the growing volume of cases led to an agreement between the banks and the OFT to seek a High Court ruling to ensure what the regulator called a "clear and orderly resolution" of the issue.

What is at stake?

Potentially billions of pounds and the future of free current account banking.

If the OFT argument is upheld it could mean banks and building societies having to return billions in fees collected from customers over the past six years.

In addition, some senior banking industry figures have suggested that the loss of income from charges - which the OFT estimated to be worth about �10m a day - could lead to introduction of monthly current account charges.

Most UK bank customers enjoy free banking while in credit, whereas in many other countries current account fees are commonplace.

Is the end in sight?

Not really.

The High Court hearing is expected to last eight days with a judgement being delivered by the court around Easter.

But whichever side loses is highly likely to appeal, possibly all the way to the House of Lords, which means the issue may not be resolved until next year.

And even if the OFT was ultimately successful, it would not automatically lead to payouts for customers.

It is expected that the question of compensation would be dealt with by the Financial Services Authority (FSA) and the Financial Ombudsman Service (FOS).

Can people still complain about bank charges?

Yes. Consumer groups are urging customers who are unhappy about their charges to continue to make a claim against their bank.

However, banks will not process complaints at this stage because they are still covered by a "waiver" granted to them by the FSA in July when the test case was announced.

This says they do not have to make progress with any new or unresolved complaints about their charges until the outcome of the court case.

In addition, since the test case announcement, most courts have also been halting new and existing claims for the return of overdraft charges until the legal issues are settled.

Some estimates suggest as many a million cases have been left in limbo.