In a confidential memo circulated among senior staff at RBS (which also owns Natwest), the OFT expressed its concerns about the fairness of charges the banks have been implementing upon its customers for exceeding authorised overdrafts and bouncing cheques, the BBC has reported.

In an historic court case intended to clarify the fairness of bank charges, the High Court ruled in April that the OFT could determine whether the charges are fair or not – a decision which is currently being appealed by the banks – and the leaked memo is a strong indication of the way the OFT will lean on the issue.

Nick Spooner, of the consumer campaigning website Legal Beagles said the OFT’s view was inevitable. He told the BBC: “The OFT would not have spent all this time investigating the issue if it did not believe the charges were unfair. But I believe the OFT should now make public the fact it thinks the charges are indeed unfair,” he added.

Hundreds of thousands of dissatisfied customers reclaimed their ‘unfair’ bank charges when the OFT launched an inquiry into bank charges, to investigate whether the banks were treating their customers fairly by charging them as much as £40 a go for going over their authorised overdraft limit or having insufficient funds for a direct debit or bounced cheque.

The FSA put a freeze on reclaiming bank charges until the matter was settled in court, but consumer rights groups are still encouraging people to send in their claims in the hope that this will put pressure on the banks and also expedite their claim if the courts rule in favour of the consumer.

At the time the memo was sent, the OFT had written to the banks, telling them that its evaluation of their terms and conditions for fairness was ongoing. At that stage all it would say to the public was that “no bank’s terms have been given a clean bill of health and all banks remain under investigation.”

In late 2008/early 2009, a court case is expected to commence which will evaluate and rule over the fairness of the charges, in response to an appeal from the banks against the initial ruling that the OFT was free to determine their fairness.

The OFT has been running an investigation into the general operation of current accounts in the UK, concluding last month that they are “not working well for consumers” and that the banks have been generating a huge income – around £3billion a year – which was largely “derived opaquely” from customers.

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