UPDATE 1-UK banks appeal overdraft charges ruling

* Successful appeal could end hopes of customer refunds

* Hearing ends Thursday

* Appeal launched by 7 banks including HSBC

(Adds Which? lawyer comment, background, recasts lead)

By Myles Neligan

LONDON, June 23 (Reuters) - Leading British banks on Tuesday launched an appeal in the country's highest court which could scupper efforts by their customers to claim billions of pounds in refunds for overdraft charges.

Seven lenders, including HSBC Holdings Plc (HSBA.L: Quote, Profile, Research)(0005.HK: Quote, Profile, Research), Britain's biggest bank, are appealing in the House of Lords against an earlier ruling that overdraft fees fall under the scope of consumer contract law, and can be regulated by the Office of Fair Trading.

If the Lords' decision goes against the banks, the OFT will estimate a "fair" overdraft charge which would then be used to determine refunds payable to bank customers.

HSBC said in March last year it could take a $600 million hit if it loses the case. Analysts have estimated defeat would cost the banking industry over 2 billion pounds ($3.3 billion) in lost revenue and refunds.