The whole sage of the bank penalty charges has been quiet in the last few months, mainly due to the High Court test case.

The High Court's preliminary ruling is expected in April or May, and that is good news for many of you that have been following this issue in the last few months (especially if you want to claim your money back!)

The banks have been given permission to put any new or ongoing refund claims on hold until the outcome of the test case is known and even a decision is forthcoming soon, the HSBC said the legal dispute could continue for years.

So far, the banks have paid out more than £784 million to those of you who complained about your unauthorised overdraft charges.

But the actual total is set to be higher, however, as both Abbey and Nationwide both declined to disclose how much they had refunded (although the Consumer Action Group have some idea).

It's probably not a small sum though is it?

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The huge sums were revealed in the annual results of most of the banks involved in the test case over the issue of whether their charges are fair.

Unless you are completely unaware, Britain's major banks and the consumer watchdog are trying to resolve the long running dispute on the charges applied to unauthorised account overdrafts, after thousands of you reclaimed your bank penalty charge refunds but banks continued to impose the fees.

According to the Office of Fair Trading, the charges (typically between £24 and £39 pounds for each unauthorised overdraft but campaigners claim the actual cost to banks is as little as £2.50), should be regarded as unfair under consumer contract regulation.

This was the basis of the case that Tom Brennan famously brought against NatWest.

The banks say that their charges are fair and clear; but if that is the case, why did they pay out more than £400 million in refunds in the first half of 2007? The payouts per bank are:

- The HBOS Group (includes Halifax) £122 million - Royal Bank of Scotland Group (includes NatWest) £119 million - Barclays £116 million - HSBC £115million - Lloyds TSB £76 million - Clydesdale and Yorkshire banks £11 million

HSBC said that as a worst case scenario, it could take a £303 million hit from the court case, thus raising the prospect that customers could win billions in penalty charge refunds from banks.

The other banks involved declined to predict the total liability they would face, but if like HSBC total payouts would be more than double the amount so far refunded, banks could collectively face a bill of more than £1.1 billion.

Currently, the banks are thought to make between £2 billion and £3.5 billion a year in fees charged from those of us who go into unauthorised overdraft.

Lawyers have warned that, if the charges are scrapped or drastically reduced, it will mean an end to free banking and all customers will have to pay a monthly current account fee.

The OFT has dismissed suggestions that current account holders could face charges averaging £300 a year if banks are forced to give up their controversial fees.

The British Bankers' Association has claimed that free banking could disappear if the courts ruled in the OFT's favour, warning that its members "could follow patterns abroad where banks charge for transactions such as ATM usage, direct debits and standing orders, in addition to an annual fee".

So, the huge saga of bank penalty charges continues to rumble on, but maybe, the end is in sight; one way or another!

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