Bank of Scotland is paying out substantial compensation to customers after it failed to notify them properly of a 33% hike in the cost of its flagship fee-paying account.

Customers with its Ultimate Reward account for their main banking are getting about £56 each in compensation and lost interest after the bank admitted it failed to warn them properly that the monthly fee was rising from £7.50 to £10.

The Edinburgh institution would not reveal how many of the account's customers are in line for the mini-windfalls, but the figure is thought to run into the thousands.

Laura Willoughby of the Move Your Money campaign group said: "It's the same old story, banks not being transparent about what they are charging people and not being clear about what it is they are being charged for." She said the bank's action had clearly been prompted by a customer complaint, and added: "It should not be up to a customer to catch out a bank and challenge it."

The Ultimate Reward account was heavily sold from 2008 by Bank of Scotland and Halifax.

Such accounts with extras factored into the package for a fee have become increasingly popular.

But the number of complaints about them to the ombudsman has doubled to about 60 a week, with most concerns centred on the promotion of insurance products within the accounts to people who did not need them.

Details of the latest round of compensation payments that banks are paying out come as the rules governing fee-paying or packaged accounts are tightened up with today's launch of the new consumer regulator, the Financial Conduct Authority.

Bank of Scotland has said it first wrote to apologise to affected customers in September last year, 12 months on from the fee increase.

But neither the bank nor the outgoing regulator, the Financial Services Authority, had given any hint that there might be a requirement to reimburse customers.

"This is the change the bank didn't notify you about properly," the bank has now told account holders in a letter which goes on to say it has reimbursed £52.80 into their account plus £3.17 interest, reckoned at 8% over 20 months.

The bank was unable to say last night how many customers got the payments.

One Herald reader who received the letter said it had come out of the blue. "Most people will probably be pretty surprised about this. I don't actually feel I have lost out, but I am going to end up with a £56 rebate which is nice."

One in five adults are estimated to hold a packaged account. They feature insurance add-ons and fee-free overdrafts at a cost typically of £10 to £15 a month. The Ultimate Reward was Bank of Scotland's principal fee-paying product until it was withdrawn in Scotland in 2011 when BoS switched to promoting Lloyds TSB accounts.

In September 2011, the bank raised the cost of the account for existing customers from £7.50 to £10 a month, an increase of 33%, or from £12.50 to £15 for customers not paying £1000 a month into the account.

The bank's letter to customers says the failure to notify properly means it is refunding the £2.50 increase for the 20 months since September 2011, plus interest.

The payouts come as two major sellers of fee-paying accounts, Lloyds/Bank of Scotland and the Co-operative Bank, both withdraw their products from sale in branches after the crackdown on possible mis-selling. Lloyds will only allow

customers to upgrade online to four accounts, charging up to £25 a month. The Co-op is redesigning its accounts.

A Bank of Scotland spokesman said it wrote to its Ultimate Reward Current Account customers in 2011 to tell them of changes to their account on September 1, 2011.

Late in September 2012 it found some customers did not get this letter and wrote to them to apologise.

He said: "We do apologise that a small number of customers did not receive prior notice of the change.

"We have now written to all affected customers again to draw their attention to examples of detriment which may be individual to them, and we will be refunding all affected customers with the increased fee plus interest."