A YEAR ago Sarah Ferguson embarrassed her in laws by complaining to an audience in Washington that like many single parents she was, quite frankly, hard up.

If the extravagance and high living of the let them eat cake duchess had been a secret, we might have sympathised with her story. Since separating from her husband, Fergie, as Britain affectionately or scornfully knows her, had had to give up her home and move with her two small daughters to rented accommodation.

Like millions of other single mothers her dream was financial independence. Of course, there was a settlement of sorts, but £2 million was hardly enough to keep a woman and two children going.

She and her then close friend John Bryan - a sort of financial adviser cum boyfriend - tried out a few business ideas. Goodness, she would have a jolly good go at anything!

Attempting to pick up the threads of her less than dazzling pre marriage publishing career, she even tried her hand at children's books. She had high hopes for a lovable little character called Budgie the Helicopter. But these are, at least temporarily, grounded.

A few months ago the rumours of an overdraft surfaced. Trouble with the bank - who hasn't had it? Who hasn't gone through tough times; lived ever so slightly beyond their means and received one of those stiff, dreaded letters from the high street bank manager?

But this week the extent of Fergie's debt became clear, though not the precise reasons. Lavish over spending is being latched upon as the root cause of a reported £1 million overdraft at Coutts, her mother inlaw's bank, and £2 million in other debts. The spending spree in New York, where she bought 20 pairs of shoes and boots, costing £3,000 in all, and the £50,000 she reportedly spent on 12 dresses from designer Isabel Kristensen, are being raked over, as are the year round holidays and ski trips.

By any standards this cash flow problem is epic. After plenty of near misses Fergie seems finally to have confirmed a senior, Buckingham Palace press aide's assessment she was "unfit" to be a member of the royal family.

Queen Elizabeth's message this week was delivered in the usual palace speak, but the message was clear: she was fed up bailing out her Imelda Marcos of a daughter in law. The debts are hers. She is in it on her own.

Fergie is not alone in being a toff living beyond her means. And while it is all confidential she cannot be the only customer of Coutts, Britain's oldest bank, to be doing so.

If the scandal has raised questions about Fergie it has raised just as many about the nature and practices of the private bank which allowed her overdraft to reach such proportions.

Coutts cannot comment on the particulars of the case. Its reputation is based on serving an elite band of aristocratic customers whose confidences are respected absolutely - as are those of Coutts's more nouveau riche customers, such as the singer Sting, who now provide the vast bulk of its custom.

The bank with the frock coated tellers and cap doffing doorman also shies away from giving specific details about the minimum liquid assets that potential customers must possess. Some of the high street banks that have begun to move into the increasingly lucrative private banking sector claim that it is as high as £250,000 or even £500,000.

When pressed, Coutts says its baseline is £150,000, but emphasises that it looks ahead and considers potential earnings. Even at Eton, where they offer every boy the chance of joining the bank, they do not expect all 18 year olds to have that sort of money; at least not that which they can get their hands on just yet.

What Coutts offers is old fashioned personal service, snob value and a return to an older, pleasanter Britain.

"The doorman always opens the door and addresses you as sir or madam," says one lifelong customer. "London is so much more more brutal than it was 20 years ago and the treatment at Coutts is so lovely."

The impressive headquarters on the Strand divides its customers into five inner branches: Adelaide, Buckingham, Chandos, Duncannon and Villiers; the latter is reserved solely for the Royal Family and only the longest serving employees have any inkling of its workings.

A couple of weeks ago Jennifer (not her real name), who is 35, the granddaughter of an earl and a customer of Coutts since birth, received a letter from her bank manager. The gist of it, she says, was Dear Jennifer, I am sure that you will be aware that you are a few thousand overdrawn at the moment. We are not in the slightest bit alarmed. Lots of love.

This is a typical missive from one of Britain's smartest and most expensive private banks to a member of the aristocracy. One of the reasons Jennifer banks there, she freely admits, is because of the bank's famous snobbery.

"It doesn't matter how poor you are; if you've got a title at the top of your file, or even at the top of your cousin's file, then you will be treated with kid gloves.

"By contrast, a rich friend who also banks there, but is not aristocratic, gets much more acerbic treatment than I do."

Another client tells of making a trip to London from the country. He decided to cash a cheque at Coutts in the Strand. Before he could blink, the receptionist asked him to wait a moment because his bank manager wanted to see him.

"I was terrified," he says, "but when the man appeared he shook my hand and said, `I saw that you were here and wanted to say hello since we see each other so seldom'."

That the Duchess of York should have been allowed to go at least £1 million overdrawn, according to this week's estimates, surprises customers of the bank's Strand headquarters not at all.

Equally, a staff insider says he would not be remotely surprised if all the royal family accounts were overdrawn, although the true state of their affairs is confined to a discreet handful of the bank's longest serving employees.

"Am I surprised at Fergie's situation? Far from it," says one daughter of a peer who is familiar with the arcane world of private banking.

"The problem with Fergie is that she and her family, while of the right background, have little money or wealth. Yet she was living like a lottery winner, or as if there were no tomorrow. Obviously, that is just the way she is."