By Ian Pollock
Personal finance reporter, BBC News
Brian Doctor continues his submissions on Monday
The public terms and conditions of bank current accounts fail to tell customers exactly what their overdraft charges are for, the High Court has been told.
Brian Doctor QC, for the Office of Fair Trading (OFT), said this flaw meant that their charges fell within the scope of consumer contract legislation.
Mr Doctor said some bank literature was "self serving propaganda."
Seven banks and the Nationwide building society say the OFT has no authority to investigate their charges.
Mr Doctor was speaking on the 10th day of the vital test case which is supposed to decide if the OFT can rule on the fairness of bank overdraft fees.
It is being staged with the agreement of both the OFT and the banks, partly in response to a mass of litigation in the county courts in the past two years, during which hundreds of thousands of bank customers have been suing their banks for the return of their overdraft charges.
The QC pursued the theme of his previous submissions on Tuesday and Wednesday, that the banks had been rewriting their terms and conditions as "fees for a service", simply in order to avoid the 1999 regulations on Unfair Terms in Consumer Contracts.
He said their language was now suggesting that the act of going overdrawn was an informal request to the bank, for it to consider granting the customer an overdraft or for processing his request.
"This is an entirely artificial concept based on a "deemed request"," he said.
"This is not a benefit at all or a new service," he added.
Mr Doctor went on to argue that despite the new wording adopted by most banks in the past 18 months they had, because of another important consideration, failed to sidestep the regulations.
He told the Judge, Mr Justice Andrew Smith, that the consumer contract legislation meant that a contract that specified a price also had to specify the service to which it related - but the banks' literature did not do this.
"It must be a price or remuneration in exchange for a service - none of them are," he said, referring to the charges laid out in the banks' current contracts.
"The goods or services promised in exchange must be clearly identified."
Lists of charges
To illustrate his point, Mr Doctor spent much of the day slowly going through the terms and conditions of each of the eight lenders, at times apparently stretching the patience of the Judge.
Mr Justice Andrew Smith had his patience tested by the OFT
But one by one he claimed that while the lenders had listed their overdraft charges, none of them said explicitly what the charges or fees were actually for, or why they were being levied.
Describing the leaflets and booklets as incoherent and inconsistent, he said the charges were not fees for services but simply fees for a set of circumstances while overdrawn.
"They merely set out when they will be triggered," he said.
In that respect, he argued, nothing had in fact changed in the underlying contractual relationship between the banks and their customers.
Only the Nationwide, he agreed, had not re-written its terms and conditions.
In the course of the day Mr Doctor laid out several other objections to the banks' claim that overdraft charges are a core feature of their service, and thus not open to challenge under the regulations.
He said the main price for credit was the interest rate, and that personal banking was often advertised by banks as being free.
He returned to a previous point that banks often warn customers against going overdrawn, and portray overdrafts in their literature as something that is best avoided.
"Advice to reduce or avoid overdraft fees suggests that they are not the main part of the contract," he said, referring to the terms of the HBOS bank.
The hearing is now expected to last until next Thursday.