Wednesday week (25th November) will be D-Day for the banks in the long-running bank charges saga after it was announced earlier today that the Supreme Court will deliver their ruling on the legal battle according to MoneySavingExpert.

Both the High Court and the Court of Appeal have ruled that charges can be assessed for fairness by the OFT, and if the Supreme Court upholds that view then it could reopen the floodgates for consumer claims for compensation against their banks.

The hearing is scheduled to be handed down at 9.45am where the law lords will deliver their verdict into whether or not charges of around £39 each for exceeding overdraft limits or returning a direct debit are fair. The Supreme Court has already hinted that it thinks they are unjust and are widely expected to throw out the banks’ appeal.

Over one million claims are currently stuck in limbo and clogging up the legal system, thanks to a FSA waiver and prior to the litigation banks had already reimbursed consumers with more than £1 billion before claiming was suspended.

However, even if the Supreme Court does find in favour of the OFT there is little to prevent the banks challenging their findings and so continuing to drag the whole affair on for much longer. According to MSE, it would be hoped that political intervention after the verdict would prevent any further appeals, especially given the fact that some of the banks in question, including Lloyds TSB and HBoS are taxpayer-owned.

“I’ve had letters from Messrs Brown, Cameron and Clegg all effectively committing to that and MoneySavingExpert.com, with its 8 million users a month, will try and ensure they stick to their promise.” Martin Lewis, consumer champion and founder of MoneySavingExpert.com commented.

The case, which is currently undergoing discussion in the House of Lords could cost British banks billions of pounds should the Lords rule against them and Mr Cameron is believed to be considering a plan to introduce automatic payback of charges should the Tories win the general election. The Tory leader has already instructed the shadow Chancellor George Osborne to investigate the possibility of automatic compensation which would do away with the need for consumers having to raise a claim.

In an email sent in response to Martin Lewis of website MoneySavingExpert.com, Mr Cameron said:

“Once the legal issues have been resolved I agree with you that bank customers must be compensated quickly and fairly for any unfair charges that they have had to pay. So I’ve asked my Shadow Treasury Team to look at your suggestion that banks should pay money back automatically if the courts do rule that the charges are unfair.”

The full wording of Mr Cameron’s response can be found here.

The Tories’ promise could see the amount of compensation being paid back by banks far surpass the original figures claims Mr Lewis. Should automatic compensation occur, the banks could be forced to pay back as much as £10billion or even more; whereas if consumers were to continue to claim against their banks, the likely payout would be much less – perhaps £2-3billion.

The Lords’ verdict is expected sometime in Autumn.