High Street bank Alliance & Leicester (A&L) has backed down on an issue concerning one of its customers and the overdraft fees that it has levied on their UK current account.

It seems to have acknowledged that £4.50 is a fair price for bouncing a cheque, rather than the advertised fee of £25. This is the amount the bank has put forward in a letter seen by the BBC to settle the anonymous customer’s demand for a refund of £2,035.

A&L argued in its letter that the charges applied to the customer’s UK current account for going overdrawn without permission were “raised in accordance with the terms and conditions of the account”.

But in an apparent backtrack it then said: “A recent report commissioned by the BBC claimed the cost would be no more than £4.50. Therefore, I propose to offer you the difference from £4.50 up to the amount of charges that were raised, which totals £1,558.”

Marc Gander of the Consumer Action Group, which has led the campaign against excessive bank charges, said: “This is a wholly unusual letter. They always say their charges are transparent and reasonable.”

In the past 12 months many people have written to their banks to reclaim excessively high charges levied on their UK current accounts and have argued for refunds going back six years, claiming the charges were illegal.

Not one bank has contested a claim in court as they fear a victory for a customer will set a precedent that will cost them millions.