He speaks his mind, exudes enthusiasm, earns a very modest salary, and annoys bankers, bureaucrats and politicians.

In his cramped office, stacked to the ceiling with files, in one of Glasgow’s least fashionable shopping parades, the word he uses most is “exciting”.

That helps to explain how his success in building the tiny Govan Law Centre into a campaigning force for consumers nationwide, notably on bank overdraft charges, has led to his recent appointment to the UK’s Financial Services Consumer Panel.

“You have got to work from within the system,” Dailly says. “I am often seen as challenging the system. That is fine, but at the same time you realise you have got to use every tool at your disposal to deliver your agenda.”

He goes on: “It is a really exciting time to be there. One of the big things I am really concerned about is the handling of complaints by banks. My real kind of bugbear is that whenever you contact a financial institution, not just the banks, in terms of buying a product, they are all over you and they couldn’t be nicer. You get their special attention, they will phone you back and so on. But whenever you have a complaint, it just goes into the bin effectively, you get a shoddy service, nobody is interested. I just think that has got to change.”

Three years ago it was Dailly who was entrusted with the £100,000 fighting fund of the UK-wide campaign against unfair bank charges, which scented blood when judges in the English county courts began to strike out cases brought by the banks. Govan Law Centre’s website was the first to offer the template letters, soon copied by many other groups and the media, which were used to devastating effect against the banks by legions of consumers.

More than 1.1 million customers claimed an estimated £1.7bn in refunds from the banks until the Office of Fair Trading stepped in with a test case and all complaints were frozen in July 2007 – until a Supreme Court judgement on November 25 finally let the banks off the hook.

Dailly, who is now attempting to rekindle the campaign despite the judgement, recalls the early action. “I ended up taking on a case at Gateshead County Court, because nobody else was willing to take it on, and ended up winning it. It was bizarre, because you would have thought other law centres or solicitors would act.”

Neighbourhood law centres originated in the US in the 1950s and appeared in London in the early 1970s. “There are lots of law centres around and they do a fantastic job,” Dailly says. “One thing that is unique about Govan Law Centre is that we try to take a really strategic approach. That’s why we are keen to get involved at the macro level.”

Dailly is opposed to ‘Tesco law’, lifting restrictions on legal services, saying it will mean “cherrypicking” of the most profitable business. “Most practitioners in Scotland are very small, which means lots of consumer choice. You will see these firms going to the wall and less choice.” His stance earned him a solicitor’s letter of his own – from consumer group Which? threatening to sue over his criticism of the group’s lack of knowledge on Scotland. “I published it on the internet and they went away,” he says.

Dailly welcomes the recent switch of retail banking regulation from the Office of Fair Trading to the Financial Services Authority. “It makes a lot of sense to have one regulator dealing with all of the big banks. The other really exciting thing is the fact that the FSA, which is hugely influential and powerful, has departed from the ‘light touch’ approach, and is now coming out and being far more interventionist – all sorts of things are happening.”

He particularly welcomes the FSA’s crackdown on banks which turn the screw on defaulting mortgage borrowers, forcing unnecessary repossessions. This month, the regulator fined GMAC £2.2m for failing to treat borrowers fairly. “I have been banging on about this for years,” Dailly says. “We (routinely) prevent repossessions in Glasgow, South Lanarkshire, East Renfrew, East Dumbarton, and Ayrshire.”

He says of the bank charge battle: “I suspect part of the problem with our top bankers is they don’t live in the communities that you and I live in, they can avoid meeting an ordinary person. I have no doubt they are decent people, but they are out of touch with what’s fair.”

Dailly’s first job after qualifying as a lawyer was with a practice in his native Fife. He soon gravitated towards community law and joined the Govan centre in 1999, building its portfolio of funding support to £750,000 a year. “We had three and a half staff. Now we are up to about 22, with an office at Govanhill,” Dailly says.

The centre’s lawyers earn fees from successful case wins, consultancy work, and educational events, and have worked with most of the Scottish political parties on draft bills in key social policy areas. But they earn no bonuses and recycle all profits into the centre.

The centre will also provide a free service rather than earn a fee by asking a client to contribute under the legal aid scheme.

“I strongly believe it is the right thing to do,” Dailly says. “It makes life tough for us because we are not able to make even the fees that we could. But it is a matter of ethical policy. That is the environment I have been exposed to all my professional career – a lot of people think the voluntary sector is cushy. It isn’t, it is just as competitive and as tough as the private sector.”

He adds: “Don’t get me wrong – you could do public good in the private sector. It probably comes from my background growing up in a difficult working-class estate, and seeing the injustice dealt out to people. People not knowing their rights, not knowing how the system worked. It seemed to me you needed to be clever about the law for people that didn’t have any money.”

Life is likely to get more competitive for the social enterprise model of neighbourhood centres, Dailly says, as more of their services are put out to new tender by Scottish local authorities under best value obligations. South of the border, big private sector companies have been hoovering up contracts and are likely to target Scotland.

“The problem with a tendering process is that everything is in the specification and innovation goes out of the window,” Dailly says.

“The bank charge campaign we did would never happen under a tender process; I am acting in planning inquiries for the local community – that would never be on a tender sheet.”

“Let’s say we wanted to provide an innovative service at a mental hospital to help people with their finances when they are in hospital. Under a tendering regime, Glasgow City Council would say to the NHS ‘give any money to us, we have got a strategic city-wide service’.”

In Govanhill, the law centre offshoot has been working with gangmaster licensing authorities to tackle illegal bonded labour and overcrowded migrant living conditions. It has also taken on cases against the city council on staffing issues around school closures.

Dailly warns: “If we tried to set up Govan Law Centre today, it would not happen. It is fine to have central control, but you have got to allow innovation.”