High Street banks have won their appeal over unauthorized overdraft charges.
The decision will come as a great disappointment to thousands of bank customers across Scotland and the rest of the UK who believe bank charges are unfair.
On Wednesday morning, the Supreme Court in London ruled in favour of the seven major banks and a building society, which had challenged High Court and Court of Appeal decisions that the charges come under "unfair contract" rules and are therefore subject to regulation by the Office of Fair Trading.
Abbey, Barclays, Clydesdale, Halifax Bank of Scotland and Lloyds TSB, which are now part of the same group, HSBC, Royal Bank of Scotland Group and Nationwide Building Society had challenged the court decisions.
Lord Walker, one of the five Justices of the Supreme Court who heard the case, pointed out that the outcome of the appeal "may cause disappointment and indeed dismay to a very large number of bank customers who feel that they have been subjected to unfairly high charges in respect of unauthorized overdrafts".
However, as Lord Phillips - President of the Supreme Court pointed out - it was not the end of the issue and Parliament "may wish to consider the matter further".
Lady Hale added: "The banks may not be the most popular institutions in the country at present, but that does not mean that their methods of charging for retail banking services are necessarily unfair when reviewed as a whole."
Explaining the reasons for allowing the appeal, Lord Phillips said that the relevant charges are, as the banks argued, charges that require their customers to agree to pay as part of the price or remuneration for the package of services that they agree to supply in exchange.
Wednesday's result was awaited by tens of thousands of customers whose refund claims had been frozen while the test case went through the courts.
Customers who go into unauthorized overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment. Campaigners claim the actual cost to the banks could be as little as £2.50.
If the banks had lost the test case, it could have cost them £2.6 billion a year in lost revenue and led to their having to make refunds of up to £1 billion. Before refund claims were frozen, banks had already paid out more than £559 million to customers who complained about "rip-off" overdraft charges.
Many of the high street banks have already changed the structure of the fees they charge people who go into the red, with or without permission.
The British Bankers' Association welcomed the ruling. It said: "The Supreme Court has today confirmed that the banks' unarranged overdraft charges are an important part of current account services which the banks provide to their customers and that the amount of those charges is not assessable for fairness.
"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 banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion."
Sarah McCarthy Fry, Exchequer Secretary to the Treasury, added: "Consumers, who have been waiting a number of years, will be extremely disappointed with this outcome.
"It's clear that in the past, banks were not thinking enough about their customers. That needs to change for the future. While the decision on past charges has not gone in favour of consumers, we are determined to ensure the system is made fairer in the future."
Meanwhile, Citizens Advice Scotland will today tell a committee of Scottish MPs that Scotland's banks must establish a greater sense of social responsibility, now they have been bailed out by public money.
Giving evidence to the Scottish Affairs Committee in Westminster, CAS representatives will tell MPs that many of the worst problems people bring to the CAB service exist because of banking policies which have impacted badly on their most vulnerable 'low-income' customers, driving many of them into financial crisis.
