The eagerly anticipated High Court test case bringing the Office of Fair Trading and eight major High Street lenders face-to-face, has finally begun and already been referred to by one QC as stirring up “a hornets’ nest”.

Laurence Rabinowitz QC defending the Royal Bank of Scotland Group said, "A hornets' nest had been disturbed and something had to be done".

The case is being heard at the International Dispute Resolution Centre in London’s legal heartland before Mr Justice Andrew Smith. Although having submitted their arguments in advance, each bank is expected to take up to 2 days to submit them in detail, with the case itself expected to last several weeks and not the 8-10 days originally anticipated.

The main focus of the case is the 1999 regulations that cover unfair terms in consumer contracts. The OFT believe the Unfair Terms in Consumer Contract Regulations give it authority to decide upon the fairness and level of bank overdraft and returned items charges. The banks disagree and argue that the regulations if applied would amount to ‘price control’ and cannot be applied to the price they charge for an overdraft or to the core terms of their current accounts.

In 2007 it is estimated that the banks have refunded over £400million to customers rather than go to court.