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Reclaiming bank charges

The bank made an offer to pay back my charges. However, they want to put the money back into the account as I owe them some money. I asked for it to be sent as a cheque and they refused. I no longer can access the account so wouldn't actually get the money. Can they do this as they have accepted the fact that they owe me the money but are dictating to me how it should be reimbursed to me? Surely the outstanding loan with them is a separate issue?:mad:
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