Christian
This is the usual kind of story but a bit more vicious than we normally hear.
Have they actually closed your account or just the Internet access?
If they have closed the account then of course they are probably relying on the usual contractual terms which aparently allows them to close your account at any time, at any time at their discretion.
I think that there are two issues.
The recovery of your £750 charges
and the reinstatement of your account to its original status.
The £750 shouldn't be a problem. If the money was charged by way of penalties then it is probably taken unlawfully in that the charges far outweigh the cost to the bank of your "transgressions"
You should wirte the then immediatly, explain to them that the charges are unlawful penalties and tell them that you will issue proceeding wihtin 14 days of they do not repay you in full.
Don't make this threat if you don't mean it.
Have look at
www.moneyclaim.gov.uk to see how you go about it.
But also come back here if there is anything you are not certain about and you will get the advice and information you need.
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The reinstatement of your account is a little more difficult.
I suppose that we have to be quite open and frank to deal with these problems.
The bank retains a right to close your account at any time. in fact this is an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999. there is ahort anaysis at
http://www.journalonline.co.uk/article/1001153.aspx
On the other hand, this may not be an arbitrary act by the Nationwide.
You have incurred a ot of penalties over the last 18 months and if the Bank can show that you have not been conducting your account correctly over a period of time, then they could argue that they had given you time and had acted as a last resort. You and I now that they are just retaliating but it it was the court believes that counts.
You might be better off leaving this one alone unless you can point to sime reasonable action by the bank. For instance if you can show that it was their charges which prevented you from sorting things out and in fact it was thier unlawful charges which kept you in difficulty and caused the incurrence of further penalties, then you probably have an argument.
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Finally, I'd like to say that it is clear in my mind at least that as the pressure builds up on the banks as more and more people start to take action, I expect that the banks wil start getting nastier.
I am sure that they will imagine that a big stick will be useful to keep everyone in place. (How can they be so wrong?)
Your kind of story will become more common.
My own bank has now threatened to close my account if I continue to threaten them. My reaction has been to go and open new accounts with three other banks so that I have chequebooks, internet and debit cards all ready before I start my latest process (it won't be my first).
My strong advice to anyone who is going to sue their bank is to get ready while you can. Open bank accounts so that it hurts as little as possible when your bank takes retaliatory action.
Nationwide charges and lies 
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contracts can be entered into by verbal agreement. any bank will quickly back track if they have made an agreement and then violated in this way fearful youll sue them for consequential losses too (which i would if i were you). its sad though to see a building society doing this, they are supposed to represent their members, afterall by banking with them you have a share in them dont you?
