COUTTS, the private bank that counts the Queen among its clients, overcharged a loyal customer by nearly £18,000. It refunded the money — but then asked him to leave the bank after almost 20 years.

Craig Walsh is a businessman who owns a farm in Worcestershire. He and his wife opened an account with Coutts in 1986.

Last year, Craig decided to check the interest charges on his overdraft when he received his quarterly statement because they seemed to be unusually high. He discovered that he had been overcharged a total of £17,966.27 since 1998.

The bank eventually admitted its mistake and refunded the money owed in February. But in April, Coutts told Craig it wanted to close the account. The couple were given a month to move their money elsewhere, with no explanation.

“I think Coutts has acted unfairly,” said Craig. “It has made large mistakes in calculating the interest we owed, resulting in a substantial refund. And it made even more errors when it came to close our account.”

Experts warn that overcharging by banks is common. Peter Hampton of Charge Checker, which produces the software that Craig used to verify his charges, said: “In about a quarter of the cases we look at, the bank is charging the wrong amount of interest. Most of our customers are businesses, but overcharging certainly occurs with personal accounts too.

“Let’s face it, the banking industry is enormous, the volume of paperwork is immense, and errors are inevitable.

“One of our agents suggests that accounts should be checked at least once every seven years. If you cannot manage that, at least keep a close watch on charges. After all, they are one of the reasons why banks make such big profits.”

The problem extends beyond overdrafts. A survey conducted for The Sunday Times by Omnichek, an auditing firm, suggested that half of mortgage borrowers are being overcharged by £1 billion a year. Credit-card customers are losing more than £400m a year because of erroneous interest charges and penalties.

Iain MacQueen-Sims at Omnichek said: “Overdrafts are as riddled with systemic and human error as other loans, if not more so. But the vast majority of personal customers never query their charges because they are so difficult to understand.”

Omnichek analysed almost 3,000 mortgages covering seven years and discovered mistakes in 51% of cases. Of those, 6% of homeowners had paid too little, but 45% had been overcharged by an average of £1,600.

For credit cards, Omnihek analysed more than 30,000 transactions on 286 accounts over 10 years. It discovered mistakes on 60% of accounts, with about 80% of those errors resulting from overcharged interest and penalties. In the other 20% of cases, credit-card customers were paying too little.

In Craig’s case, Coutts had typed in the wrong information about an overdraft. He said: “It appears that, in some quarters, we had been charged an unauthorised-overdraft rate of 26% rather than the authorised rate of 9% — even though we had correctly applied for the facility. To be fair, we had also been charged too little on some occasions, but overcharging was more common.”

Coutts offered a refund of £13,981 — £17,966 minus £3,985 that the couple owed the bank due to undercharging.

Coutts, part of the Royal Bank of Scotland group, said: “This occurred because of human error when the customer’s details were put into our system. It was a one-off event and did not have an impact on other customers.”

However, Craig said: “I was surprised by the extent of the human error involved. Coutts appeared to have input the information wrongly in three out of four quarters over five years.”

The bank then bungled the closure of the couple’s accounts. Just days after they were given a month’s notice, Coutts told them that their business credit card would be cancelled with immediate effect because they did not have sufficient funds in their current account to clear their monthly balance.

But the funds were low only because Coutts had paid the monthly credit-card bill of about £2,000 twice. The bank acknowledged its mistake and said it would credit their current account immediately — but it failed to do so. As a result, a number of cheques bounced and Craig incurred charges.

“The closure of our accounts was a farce. I feel very sad that our departure from a bank after 18 years was marred,” he said.

Coutts told Craig and his wife: “The decision to close the account is absolutely not a reflection on your personal respectability and trustworthiness. You have both acted with honour towards the bank.”

William Rodgers, 55, a farmer from Ballymena in Northern Ireland, had a similar problem with Ulster Bank, which, like Coutts, is part of the Royal Bank of Scotland group.

He asked a company called Bank Check to verify his interest charges — and found he had been overcharged by £15,340. Ulster Bank admitted its mistake and refunded the money.

Rodgers said: “My account statements for 1993 and 1994 were checked and it was found that I was being overcharged by 1% on my overdraft.”