Northern Rock and Bradford & Bingley, the government-backed lenders, could be forced to scrap charges levied on struggling homeowners who slip behind with mortgage payments, after accusations that the fees are unfair.

Northern Rock, which is wholly owned by taxpayers, collects more than £1m a month in arrears charges.

The controversy echoes the one about overdraft charges, which will come to a head today when the Court of Appeal rules on whether the Office of Fair Trading should be allowed to investigate their fairness. The ruling comes after a two-year fight between the OFT and six banks and Nationwide Building Society. They are appealing against a High Court ruling that backed the OFT.

The Times