Should a bank be able to close an account based on spending habits?

oldagetraveller

Zero_Sum wrote: »

My water company is a private company. However i cant opt to go elsewhere, and theyre not allowed to cut you off completely.

That's not the same because water is a life essential. Not having a bank account is not life threatening!
Are you able to choose a water supplier where you live? I certainly can't change from Severn Trent but can certainly change energy, phone, broadband etc. suppliers

londoninvestor

boo_star wrote: »

Banks are, at present, free to do business with whomever they wish.

Just like Tesco can, or William Hill, or whoever. They're a private company.

Although consider basic bank accounts. The "big 9" banks who are required to provide basic accounts, legally must provide them to any customer who doesn't have another account, and hasn't committed fraud, harassed bank staff, etc etc.

(See section 25 of the 2015 regulations for details of the criteria that allow them to decline. http://www.legislation.gov.uk/uksi/2015/2038/pdfs/uksi_20152038_en.pdf)

So in this regard, the biggest banks aren't entirely free to decide who they do business with.

It does seem a bit inconsistent then that if they just decide they don't want you as a customer, they can completely deny you an account, rather than just downgrading you to a basic.

jonesMUFCforever

londoninvestor wrote: »

Although consider basic bank accounts. The "big 9" banks who are required to provide basic accounts, legally must provide them to any customer who doesn't have another account, and hasn't committed fraud, harassed bank staff, etc etc.

(See section 25 of the 2015 regulations for details of the criteria that allow them to decline. http://www.legislation.gov.uk/uksi/2015/2038/pdfs/uksi_20152038_en.pdf)

So in this regard, the biggest banks aren't entirely free to decide who they do business with.

It does seem a bit inconsistent then that if they just decide they don't want you as a customer, they can completely deny you an account, rather than just downgrading you to a basic.

If the bank that is closing your account is the only bank in the country then you might have a case, but in your argument you have at least 8 other to choose from.

MEM62

A company should have the right to refuse your business if they choose to.

Flobberchops

It's a thorny issue, in my opinion. In theory; a bank has the ability to close a customer's account for any reason. On a whim, even. No individual bank runs a monopoly and there are plenty of alternatives on the high street (or increasingly, online or on the App Store).


In practice? I think banks have a certain moral duty towards fairness and transparency, and when they make the often unilateral and stubbornly unexplained decision to close an account they fall short of that. Closing the account of a fraudster, somebody who has been violent or abusive towards staff, an opportunistic serial complainant, or somebody who represents a severe financial risk - fine. Understood. But pulling the rug from beneath a law-abiding customer who just wants to spend their own money in an informed, consensual manner? That leaves a bad taste in the mouth, even if some algorithm somewhere indicates the customer fits the profile of a potential money mule or chargeback fraudster or whatever.

Banks are very hot these days in proudly displaying their touchy-feely credentials: empathy, accessibility, policies to benefit vulnerable or at-risk customers. Denying customers service doesn't really fit within that socially responsible ethos, at least not in an obvious way. "Go elsewhere" comes the usual response, but the obvious reply to that is, what if the next bank closes OP's account when they catch wind of transactions to Paddy Power.com? And the one after that? What if the first bank has left detrimental information on the credit report, or even a CIFAS marker?


I feel a more transparent banking code of conduct is inevitable - it's one of the most acute "pain points" we deal with in branch - but for now the industry is digging their heels in. And with the onus on banks to be financially responsible for scam and fraud losses, arguably their conservatism is logical and sensible.

bobblebob

Yea I don't think its too hard to ask a bank to explain the reasons they close your account. What if they closed it in error because they thought you were up to no good. How can you argue and appeal that if you never knew those are the reasons?

Zero_Sum

oldagetraveller wrote: »

That's not the same because water is a life essential. Not having a bank account is not life threatening!
Are you able to choose a water supplier where you live? I certainly can't change from Severn Trent but can certainly change energy, phone, broadband etc. suppliers

Not having water from a tap isnt life threatening either. You can get bottles from the shops or Plenty of lakes & rivers or collect rain water.

Flo2108

What happened 21 years ago has no reflection on the industry today.

A bank had every right to close your account for any reason.