By Paul Lewis
BBC Radio 4's Money Box
A high street bank may be forced to justify its penalty charges in court for the first time.
Barrister Tom Brennan believes bank penalty charges are illegal
No judge has ever ruled on whether charges of £30 or more to bounce a payment are legal as the banks have always paid up to prevent court action.
But a barrister now believes he can force the issue to court and is seeking a key ruling on Friday.
He is demanding the right to claim damages on top of a refund and has rejected an offer to settle the action.
Tom Brennan, who ran up £2,500 in penalties on an unauthorised overdraft when he was a law student, told BBC Radio 4's Money Box what he is asking the court.
"I am arguing for what are called 'exemplary damages'. Where a company acts unlawfully and then takes unlawful profits from a person they should face a substantial level of damages to strip them of those profits," he said.
He shares the view of many consumer groups that the charges levied by banks when people exceed their overdraft limit or a payment is bounced are illegal.
"Consumer protection regulations state clearly that you can't charge a disproportionate level of charges for any breach of contract," he said.
"The information I have from my experts it that it will cost £2.50 or thereabouts to bounce a direct debit. The bank charges me £38."
Major campaigns by consumer groups have led to tens of thousands of people recovering bank charges.
More than two million form letters have been downloaded from one website alone.
In every case the banks eventually pay up - sometimes at the court steps - so the legality of the charges has never been tested.
Mr Brennan says his approach will force NatWest to defend its actions in court.
He has refused an offer well in excess of the penalty charges taken by the bank.
"They've offered me £4,000 but I've rejected it because they keep saying the charges are both fair and lawful but I don't agree," he said.
If the court rules against him he could pay a heavy price.
"If I lose and they state that I am acting unreasonably they can ask for their costs," he said.
"They are employing senior barristers. It would bankrupt me, and that prevents you being a practising barrister or transferring to be a solicitor.
"But that will only happen if the judge awards costs and he may not if he decides I am bringing this for public reasons. This case has a momentum of its own and is too important to walk away."
In a statement, NatWest confirmed that the case was being defended but "it would be inappropriate to comment further".
The case will be heard on Friday, 13 April in the Mayor's and City of London County Court at Guildhall.
BBC Radio 4's Money Box will be broadcast on Saturday 7 April 2007 at 1204 BST.
The programme will be repeated on Sunday, 8 April at 2102 BST.