Just a quick update on this one... .I have had a response from the Chief Executives office (apparently) - here are the pertinent bits:

"Contrary to popular belief, cheques do not legally expire after 6 months. It is usual banking pratice to consider a cheque to be 'stale' after 6 months, but if this represents a valid debtm the Bank has a contractual obligation to pay the item. The cheque was presented for payment on 23 Feb 2007 but this was returned unpaid., as there were insufficient funds in the account. An unpaid fee of £38 was charged and a letter was sent informing you fo this, however, because you had already had an outstanding debt registered with the Bank, this should not have been debited. I apologise for this error. In view of the problems you are already experiencing with your loan account, I would certainly not wish to add to the stress you have explained you are under. It is for this reason I have arranged for the account to be closed and the balance written off. I will also ensure that your credit reference file is updated and any record regarding your current account will be removed....."

So essentially a good result although it seems a bit odd and ignores the fact I had theoretically closed the account hence why no money and am not sure what the other debt registered means - possibly my loan although not sure what that has to do with it although am not certain I care too much.

One question though - no mention of compensation, should I press for this? Any thoughts on what tack to take? My original letter did mention it. Presumbly they think I am so grateful they have agreed to correct their error, that I will forget about it....