If NatWest loses its continuing test case over bank charges, it has said it will refund overdraft fees to customers. These findings come as an internal bank document reveals preparations that banks are making if they lose their case.

The document that has been found says that overdraft fees may have to be refunded, the cost of which could run into millions of pounds overall. Though the bank, which has recently been taken over by the Royal Bank of Scotland, has said it was just drawing up a contingency plan to deal with one possible outcome of the test case.

The RBS NatWest is one of eight banks in total awaiting an Appeal Court judgement as to whether or not the Office of Fair Trading (OFT) can decide if their overdraft charges are unfair.

If the bank is to lose its case, the document reveals that customers can expect to be refunded, saying that a team from the bank are “preparing systems and processes to pro-actively refund charges to the group’s customer base.”

The bank document also says that: “all customer accounts that are due a refund will be calculated as accurately as possible…Any monies will be accurately accounted for and reconciled.”

It adds that the bank aims for “avoidance of group reputational damage and/or loss of funds.”

An RSB spokesperson has said that the document found simply reflects the fact it was obliged by the Financial Services Authority (FSA) to deal with its customers complaints “efficiently and swiftly” if it ended up losing its test case.

He said that “this work stream has absolutely no bearing on how we see the outcome of the test case.

“With an organisation of our size and our different brands, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously as it has done throughout the whole test case process.”

Campaign group Legal Beagle’s spokeswoman Sharon Coleman has said: “we would welcome a pro-active approach if they intend resolving the matter without further appeals.

“Consumers have become increasingly frustrated by the apparent lack of progress in the test case, especially those affected by financial difficulty.”

For the last three years, banks have been besieged by hundreds of thousands of angry customers demanding the return of high charges taken by banks whenever customers go overdrawn without permission.

Last year, eight banks and the OFT agrees to stage a test case in the High Court in an attempt to resolve the legal issues.

In the first round of High Court hearings, at the beginning of this year, the banks lost their case. Mr Justice Andrew Smith said in April that under the 1999 Unfair Terms in Consumer Contracts Regulations (UTCCR), the OFT had the power to decide if banks’ charges were fair.

An appeal to this decision was heard in October of this year, and judgement is expected in the New Year.

HSBC and Lloyds TSB have also revealed that they have a contingency plan in place should they lose that appeal, and there is little doubt that other banks will have measures in place also.

Among the conditions set by the FSA, includes that banks will have to make “preparations for dealing with relevant charges complaints when this direction ends and updating those preparations as the outcome of the test case becomes clear.”