Tens of thousands of people will receive refunds, plus interest, for charges incorrectly applied to student current accounts held with RBS and NatWest between 2002 and 2016.
The RBS Group, which RBS and NatWest are both part of, says it has written to affected customers.
Refunds will be paid within the next fortnight, according to a letter to customers seen by Moneywise.
The two banks offered interest-free overdrafts on their student current accounts. However, some people had the option to increase their arranged overdraft limit, in exchange for interest being charged on these higher balances.
But following a business review this year, the RBS Group discovered this went against the terms and conditions of the account, which said students would not be charged interest on any authorised overdrafts.
As such, it is refunding any interest it charged on these authorised overdrafts, plus interest.
A spokesperson for the RBS Group says: “It was highlighted after a business review that between 2002-16 our terms and conditions on our student account were not fulfilled. As a result we are refunding all interest charged over that period.”