It is rumoured that the Office of Fair Trading (OFT) could drop next year's High Court test case over bank overdraft charges!
But before you all get worked up over this, the OFT said they would only do this if the major banks offered to cut their penalty charges enough, so it would be in the best interests of consumers to drop the whole case.
The High Court is likely to decide to make a decision in early 2008 in which they should sort out whether the OFT has the power to rule that bank overdraft fees are unfair.
The eight major banks challenging the OFT say it has no jurisdiction in this matter but perhaps that is because they fear the effect of the ruling going against them?
On Monday, Lloyds TSB became the first of the big High Street banks to its overdraft fees, after paying out millions of pounds in penalty charge refunds.
It seems likely that many other banks will follow Lloyds example in the months ahead, perhaps in the vain attempt to deflect the OFT from its legal action?
But a senior OFT official, made it clear that the OFT was open to negotiation on the issue: "If we do our own financial analysis, and they [the banks] come in with a number that is lower than our analysis would suggest is an unfair charge, there is no need for the court case to go forward. We will be looking out for what is the best outcome for the consumer."
However the OFT denied that there been face-to-face negotiation with the banks over the whole issue.
The biggest thing to note is that if and when the case goes ahead (which is not certain) the judge will not be asked to rule on whether bank charges are legal or fair!
Instead he will decide whether the Unfair Terms in Consumer Contract Regulations apply to the banks.
In all of this the OFT believes typical bank overdraft fees come under these regulations, that they are unfair and so it has the power to order changes. But banks have responded by saying that their charges are a key feature of their current account business and so are not covered by the regulations, they are fair and that the OFT has no say in all of this!
It has also been revealed that the OFT actually agrees with part of the banks' arguments!
They claim that their charges are not penalties, but are fees for a service; for running a current account while it is in the red.
(However the OFT still believes the levels of charges are unfair, even if they are "fees for a service")
At present the banks are giving the OFT their own estimates of how much it costs to run an account in the red and to bounce cheques. The OFT is also due to work out its own figures so they can establish what level of charges are appropriate and fair to bank customers.
The OFT has denied that the High Court test case could lead to the reintroduction of monthly or annual account charges; the end of so-called "free banking" for those of us whose accounts stay in credit.
The OFT did state that in contrast to the fees earned from charging for overdrafts, a standard charge of £300 a year, applied to the UK's 75 million current accounts, would generate an extra £20 billion or more in income for the banks; more than enough to cover what they have paid out in penalty charges!
So, is it right that the OFT tries to reach a compromise with the banks over this?
Or would it be better for all of us if the High Court test case went ahead, no matter how long it takes to reach a decision?
Petition Gordon Brown about bank charges!