A new bank account that does not charge a fee for unauthorised overdrafts or debts has been launched just days before the UK Supreme Court is expected to rule that bank charges are unfair.

Santander, the owner of the Abbey, Alliance & Leicester and Bradford and Bingley brands, is offering existing mortgage holders the chance to sign up to the current account that promises not to charge fees for missed payments, unauthorised overdrafts or other unarranged services.

Santander is one of seven banks currently involved in a test case against bank charges, with the newly-formed Supreme Court widely expected to rule in favour of the Office of Fair Trading (OFT), which claims that the charges are unfair and disproportionate. The banks argue that the charges constitute a “service charge”.

If the court rules against the banks, then the banks could be forced to pay out hundreds of millions of pounds in refunds to customers, dating back to up to seven years.

The case has come as a result of a huge consumer revolt against the charges, dating back to 2006. So far, almost one million people have claimed for the return of their unauthorised overdraft charges, but their cases are on hold. The banks will not acknowledge any further claims until the charges are deemed unlawful except in cases of severe financial hardship.

Santander is not the first to adopt a “no charges” approach, with nationalised RBS and NatWest both abolishing charges on their accounts last month.

“Santander is uniquely placed amongst UK banks to change the way it does business, and our new approach is one based on simplicity: the more business you do with us, the more we will offer you in return,” said Antonio Horta-Osorio, chief executive of Santander UK.

The Santander Zero Current Account is being offered to Abbey as well as Bradford and Bingley mortgage customers from 11 January next year. It will be offered to Alliance and Leicester mortgage customers in the late summer of 2010.