The Royal Bank of Scotland (RBS) has reportedly said it will refund unauthorised overdraft charges if it loses the current High Court test case.

An internal document, seen by the BBC, shows the preparations the bank is making in the event that they lose the case.

The document acknowledges that if the decision goes against the bank it may have to refund past charges amounting to millions of pounds.

RBS, which includes NatWest, is waiting with seven banks and a building society for ruling in the case brought jointly to the High Court with the Office of Fair Trading over unauthorised overdraft charges.

The RBS document says a team from the bank is "preparing systems and processes to pro-actively refund charges to the group's customer base."

It adds: "All customer accounts that are due a refund will be calculated as accurately as possible" and "any monies will be accurately accounted for and reconciled".

An RBS spokesman has said that the document was a contingency plan in line with commitments made to the Financial Services Authority, but it did not reflect its expectations the case.

He said: "This planning has absolutely no bearing on how we see the outcome of the test case.

"Along with the other banks, we agreed with the FSA back in July 2007 to deal 'efficiently and swiftly' with customer complaints on conclusion of the test case, irrespective of its outcome.

"Given the size of our organisation, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously."

A total of £119 million has so far been refunded by RBS to customers who have complained about unauthorised overdraft charges.

If the decision is upheld banks could face costs of £2.6 billion a year in lost revenue and members of the industry have warned this could put an end to free banking in the UK, with consumers instead having to pay a monthly fee or a fee for every transaction they carry out.

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