Alliance & Leicester is closing the accounts of people who have taken it to court over its penalty charges.
The high street bank has written to customers who won settlements for what they claimed were unfair fees for going overdrawn without authorisation or breaching their overdraft limit, telling them their account will be closed within 30 days.
A number of customers have taken Alliance & Leicester to the small claims court to have the fees refunded. The bank has not contested the claims and has settled with the customers.
But days later the people have received letters saying: "As it is clear that you do not accept certain aspects of the terms and conditions for the operation of your account, we regret that we are unable to continue to offer you banking facilities."
Alliance & Leicester defended its stance, saying the terms and conditions of its current account were made clear to people when they took them out, and under the Banking Code it can close customers' accounts as long as it gives them 30 days' notice.
A spokesman said just because the bank did not defend claims in the small claims court did not mean it thought customers had a case, or that it was accepting liability. It was simply that it was not worth the time and effort to fight a case when people only wanted a refund of £50 or £60.
He said: "We believe our charges are fair, straightforward and transparent. People know they are signing up to the charges when they accept the terms and conditions.
"People then turn around and say they don't like them, but that's not a valid position. People need to keep an eye on what they have in their account."
He added that Alliance & Leicester offered one of the best current accounts on the high street, and if people were not happy with their charges they could bank somewhere else.
The group offers people a £10 buffer zone if they overdraw without authorisation or breach their agreed limit.
But on the second day they are in unauthorised overdraft they are charged £25, followed by another £25 if they are still overdrawn on the fifth day, although charges are capped at £50 a month.
On top of this they will pay £25 for every item that is paid from their account, such as cheques or direct debits, while they are in unauthorised overdraft and £34 for any payments that bounce.
Meanwhile it was claimed that credit card companies are making millions of pounds a year by manipulating customers' repayments.
Nationwide said most people paid interest at different rates for different debts on their credit card.
For example, they may be taking advantage of a zero per cent balance transfer offer, but paying interest on any new purchases or any cash advances they made using their card.
But the building society warned that almost all UK credit card providers used customers' monthly repayments to pay off outstanding balances with the lowest interest rate first.
Nationwide said it was the only major credit card provider that applied payments to the most expensive debt first.
It claimed that banks and credit card companies made £500 million extra profit each year as a result of this practice.
