People fighting for refunds of bank charges have been urged not to accept the most common response from the banks ­ an offer of only half the money. Campaigners say banks and building societies are offering partial settlement to try to limit their losses.

Experts estimate the banks may have been levying £1.2bn of penalty charges a year and hundreds of thousands of customers are thought to be demanding refunds.

Martin Lewis, of moneysavingexpert.com, said offering half the claim was a more common tactic to forestall a full refund, rather than making illegal charges for information, delaying or suddenly closing accounts.

He warned customers could lose thousands of pounds by accepting such offers and urged court action if necessary. No bank has yet challenged in court customers' cases. Under the 1999 Unfair Terms in Consumer Contracts Regulations, the charges should not exceed the bank's costs.

Mr Lewis, whose site has now received 1.6 million requests for template letters, said: "What the banks are doing is coming out with opening salvos of half the money and many people simply accept. Claiming is a hassle and people are out of their comfort zones and the banks know this and know people are scared."

He suggested people seek no less than seven eighths of their charges. For instance someone claiming £4,000 might be offered £1,800 but they should seek ­ and probably get ­ £3,750.

Customers are also urged to demand refunds now before the Office of Fair Trading publishes its opinion on what constitutes a fair bank charge in the next few weeks. Banks may then fight court cases brought by customers demanding full refunds. That may stem some of the future liabilities of banks and building societies, who have already paid out an estimated £50m.

However, there was some bad news for the banks this week when the Treasury Select Committee announced that it was to investigate the sector ­ aday after the leading nine banks reported record annual profits of £40bn ­ a rise of 33 per cent.

The cross-party committee, chaired by Labour MP John McFall, pointed out that its inquiry would take place seven years after the publication of Don Cruickshank's review of bank competition.

The committee is likely to interview banks, consumer groups and campaigners.

Banks' dubious tactics

Illegal Overdraft Charges:

Banks are not allowed to profit from charges. Unauthorised overdraft fees should cost £4.50, but banks charge up to £39

Data Charges:

Banks are not allowed to charge more than £10 for supplying information about charges. But some banks charge their customers an hourly rate

Inadequate Settlement:

Instead of providing information about charges, banks have made low settlement offers

Delays:

Banks have been accused of delaying beyond the 40-day limit for information

Closing Accounts:

Customers have had their accounts closed