Current account providers have been warned to stop incorrectly dismissing claims for the repayment of bank charges from customers in financial difficulty.
The Financial Ombudsman Service (FOS) has written to banks and building societies to remind them of their obligation to consider these cases.
It found that many people struggling to pay essential household bills were being turned away by their bank when they approached them for a refund of their charges.
Although the Financial Services Authority gave current account providers a waiver allowing them to delay refund claims until the legal battle over bank charges is resolved, it said they must deal with customers who were "unable to meet priority financial commitments" such as council tax bills.
A spokesman for the FOS said it was currently receiving around 300 cases a week involving financial hardship. Since July 2007, when complaints about the level of charges on unauthorised overdrafts were put on hold, it has had around 10,000 cases where financial hardship has been claimed.
"In around half of these cases we have decided that hardship was a priority issue which we sorted out," he said.
For some people, bank charges for unauthorised overdrafts and bounced cheques and payments have run into thousands of pounds over the past few years.
The website MoneySavingExpert said it had "countless reports" on its talk forums from people who said their banks had flouted the rules. "We've seen a raft of complaints about banks replying with generic letters, playing runaround, using delaying tactics and ignoring people in dire need," the website's founder, Martin Lewis, said.
A letter reminding banks of their obligations has been sent to about 20 of the bigger claims management companies. These companies take on cases on behalf of consumers in exchange for a sizeable slice of any money they receive if they win the case.
The ombudsman wants companies representing such clients to provide evidence of hardship, just as it wants banks challenging the claim to provide evidence to support their own stance.
The letter, signed by Caroline Wells, external liaison manager at the FOS, said: "We see cases where it appears to us that the bank has not engaged properly with the consumer (or their representative) to gain a clear understanding of the consumer's financial position. Where banks follow iterative or circular processes consumers can be left feeling powerless to progress their complaints.
"This difficult situation is made worse by standard or generic statements (by any of the parties) which do not address the consumer's individual circumstances and may even be inaccurate. So I am asking you to ensure that you do all you can to avoid unnecessary referrals of cases to the ombudsman service – by promoting the early, fair resolution of your customers' complaints."
The British Bankers' Association said its members were committed to "working sympathetically and positively with customers to resolve their financial difficulties".
It continued: "There is nothing in the ombudsman letter to challenge this.
"It is also a condition of the case on fees for unarranged overdrafts that banks process claims for those in financial hardship. The banks believe they are satisfying this condition – and the regulators are monitoring this closely."