The QC for Royal Bank of Scotland, Laurence Rabinowitz, has continued to defend the current system of overdraft charges in the case currently before. Mr Justice Andrew Smith in the High Court suggesting "that bank customers prefer today’s system under which they only pay charges if they go overdrawn".

The alternative he said "would be a system that charges for all transactions regardless of whether the customer was in the red or not". At the moment customers who go overdrawn in effect are cross subsidising those who stay in credit and this RBS argues is fair and liked.

He added that “charges are being levied for the bundle of services” and in direct response to a criticism from the OFT and consumer groups about customers in the red not just being charged for the unauthorised borrowing, he added "It is incorrect to say they are charged only for those services. The package of services is always being supplied. They are at one and the same time charged both for the specific service and the overall bundle of services".

The case is expected to last several weeks with an initial ruling near Easter. Whatever the outcome, the thorny subject is likely to continue possibly going all the way to the House of Lords and with no final outcome until next year.

If the banks do end up losing, the British Bankers Association has warned of consequences, the end of free banking for everyone including those who stay in credit and never pay charges.