Over one million consumers are awaiting a decision from the Supreme Court this week which could see the return of millions of pounds charged in unfair overdraft fees, however, there are fears the decision could put an end to free banking services.

On Wednesday the Supreme Court will make a final ruling on the case between seven banks, Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Clydesdale and Yorkshire banks, Royal Bank of Scotland and Nationwide Building Society, and the Office of Fair Trading (OFT) which has been ongoing since July 2007.

The OFT claims that fees charged on unauthorised overdrafts generate around £3.5 billion each year for banks and are not reflective of the administrative costs involved for the banks, making them illegal.

The banks have argued that this income needs to be seen as part of a bigger picture which sees banks offering free services to customers including money transfers, cash withdrawals at ATM’s and cheque payments.

If the court finds in the OFT’s favour then banks have threatened to recoup billions of pounds in revenue by starting to charge their customers for services that have traditionally been free.

The OFT previously investigated the overdraft fees and suggested that they should be no higher than £12, which led to an influx of court cases with customers resulting in banks repaying £560 million. Cases were then frozen from July 2007 when the case was taken to court. An estimated 1.1 million banking customers have cases on hold awaiting the outcome of the decision.

Despite the freeze on cases, the Financial Ombudsman Service has still been reviewing cases for consumers with debt problems and who are in financial hardship and of 10,000 cases reviewed; it found that half of those should be dealt with promptly.

Banks have revised overdraft charges in recent months, but currently only Barclays charges less that the suggested £12.