Continuing his defence of bank charges on behalf of the Royal Bank of Scotland, Laurence Rabinowitz QC said "customers benefit from the current system". He said "overdrafts were a core part of accounts and that therefore consumer law doesn’t apply". Claiming that the average RBS customer goes overdrawn three times a year without permission and that as such providing customers with unarranged credit was a ‘substantial and valuable service’.

By allowing customers to have the facility of unarranged credit, this enabled people to draw on cheques before the 6 day clearance period was complete and allowed retailers to accept debit card transactions without phoning for authorisation. Unarranged credit was central to the UK banking system.

The OFT claims however that this is not a core feature of the account rather the banks are applying a penalty. The OFT wants the court to rule, that it has the power to decide that the charges are unfair.

In recent weeks and months many banks have made changes to their current terms and conditions which Mr Rabinowitz denied were a thinly veiled attempt to hide the real situation.

He maintained that no attempt had been made to change the core of the contract and finished by saying: "So long as they are payments for services, and are not payments for breach of contract, they cannot be penalties".