Banks closing accounts

RG2015

AstonSmith said:

RG2015 said:

I am unhappy with the possible consequences of the point in your first paragraph. Banks have a duty of care to every one of their customers regardless of protected characteristics.

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

I agree completely. Occasionally threads are posted on here where someone's account has been closed, and there'll be responses along the lines of "we're not getting the whole story" and "banks don't close accounts without a reason".

With banking being so important in an increasingly cashless society, I think the law should be changed so that banks have to give a better explanation of why they are closing an account.

@TimSynths - that's fascinating, and what I suspected. It's why I won't ever accept bank transfers from third parties, in case I'm whisked into a mess I had no part in. I've seen enough threads about peoples' accounts being locked to learn the lesson.

I have frequently had accounts locked but this is quite different to being closed.

DullGreyGuy

RG2015 said:

DullGreyGuy said:

RG2015 said:

A bank can close a bank account without giving a reason. They can also close an account for irregularities without providing any evidence. This second point is based on a post on another thread today and I see no reason to doubt it.

My question is whether there is any evidence of a bank doing this to a completely innocent customer?

Banks, like all businesses, are free to choose who they want and dont want as a customer as long as its not due protected characteristics (race, sexual orientation etc). 

Had a joint loan with an ex that I'd taken on payments for when we split, whilst it was fully paid up to date and only had a couple more months to run but it appears the ex got into financial difficulties and was told they were closing both the loan account and my current account that was in my sole name. On the plus side they did say they'd write off 50% of the loan if I could repay it in full... unfortunately no such offer for the small interest free overdraft that I happened to be in as it was close to payday. Though it was "her fault" the account was being closed because she wasnt named on it they wouldnt give any settlement offer. 

I am unhappy with the possible consequences of the point in your first paragraph. Banks have a duty of care to every one of their customers regardless of protected characteristics.

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

Why not look at how the Ombudsman treats this matter:

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/banking-and-payments/bank-account-closures



How do you think an account being closed can result in hardship? Unless its for fraud or because of threatening behaviour to staff then the ombudsman expects customers to be given at least 30 days notice which they believe is reasonable timescales for someone to open a replacement account. For the statutory basic account the notice has to be 2 months and there are a set list of grounds on which they can be cancelled

p00hsticks

RG2015 said:

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

How would people be aware of the smoke though ?

People these days are closing accounts all the time, if only to get switching bonuses.

Do credit reports distinguish between accounts that are closed by the bank and those closed by the customer, and if so, is the reason for closure identified in any way ?

Unless the account is immediately frozen due to suspected fraud, a customer will be given enough notice of the closure to arrange a switch away and so will effectiveyl be closing the account themselves anyway.

RG2015

DullGreyGuy said:

RG2015 said:

DullGreyGuy said:

RG2015 said:

A bank can close a bank account without giving a reason. They can also close an account for irregularities without providing any evidence. This second point is based on a post on another thread today and I see no reason to doubt it.

My question is whether there is any evidence of a bank doing this to a completely innocent customer?

Banks, like all businesses, are free to choose who they want and dont want as a customer as long as its not due protected characteristics (race, sexual orientation etc). 

Had a joint loan with an ex that I'd taken on payments for when we split, whilst it was fully paid up to date and only had a couple more months to run but it appears the ex got into financial difficulties and was told they were closing both the loan account and my current account that was in my sole name. On the plus side they did say they'd write off 50% of the loan if I could repay it in full... unfortunately no such offer for the small interest free overdraft that I happened to be in as it was close to payday. Though it was "her fault" the account was being closed because she wasnt named on it they wouldnt give any settlement offer. 

I am unhappy with the possible consequences of the point in your first paragraph. Banks have a duty of care to every one of their customers regardless of protected characteristics.

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

Why not look at how the Ombudsman treats this matter:

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/banking-and-payments/bank-account-closures



How do you think an account being closed can result in hardship? Unless it’s for fraud or because of threatening behaviour to staff then the ombudsman expects customers to be given at least 30 days notice which they believe is reasonable timescales for someone to open a replacement account. For the statutory basic account the notice has to be 2 months and there are a set list of grounds on which they can be cancelled

I assumed that closing an account for suspected fraud may leave a marker on your financial / credit record.

Suspected fraud is not fraud. Note the case mentioned on post no. 2. The closed account holder was innocent other than by association with suspected fraud.

But even if the credit history was unaffected, significant inconvenience plus possible psychological anguish is hardship in my book.

Band7

p00hsticks said:

RG2015 said:

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

How would people be aware of the smoke though ?

People these days are closing accounts all the time, if only to get switching bonuses.

Do credit reports distinguish between accounts that are closed by the bank and those closed by the customer, and if so, is the reason for closure identified in any way ?

Unless the account is immediately frozen due to suspected fraud, a customer will be given enough notice of the closure to arrange a switch away and so will effectiveyl be closing the account themselves anyway.

There doesn’t appear to be any information on credit reference files about reason/method of closure, or who initiated it. At least I can’t see any.

Moreover, it doesn’t appear to matter how many open and closed current accounts you have (as long as you have no defaults on any of them). I have several dozens of each and never had a problem getting ever more current accounts and credit cards.

Individual banks are likely to retain closure information. Whether and how they use this information is a different matter, and almost certainly depends on the reason for closure.

Band7

WillPS said:

It's never happened to me but I do somewhat fear it. I remember one day I received a letter in a Natwest branded envelope and a similar one in an RBS branded envelope. In my mind's eye both were marked 'important information enclosed' or similar. I was convinced they'd be closure letters. Turned out it was a closure letter of sorts in both, but a much less scary one - Natwest Group had decided to close both my NatWest branch (Nottingham Victoria Centre) and RBS branch (Child & Co) in the same round.

Band7 said:

ndrw said:

RG2015 said:

A bank can close a bank account without giving a reason. They can also close an account for irregularities without providing any evidence. This second point is based on a post on another thread today and I see no reason to doubt it.

My question is whether there is any evidence of a bank doing this to a completely innocent customer?

Yes, I opened an account with a now-defunct bank with the intention of testing it out then switching over if I liked it. Set up the account, added card to Apple Pay, paid some money in. Then the following working day I woke to my Apple Pay being disabled and being unable to log in. Closed and the CS would refuse to say why. Only had one transaction in and one out to set my other account up as a payee (before the days of CoP). No issues before, or since, with any other bank.

I will never bank with them - or their successors - ever again.

Which bank which used to offer ApplePay is now defunct?

N27 perhaps? Post Office, Salvation Army, M&S Bank and Tesco Bank are still about but have withdrawn from current accounts.

I must have missed the Salvation Army Bank, and all the others still exist. They may no longer offer current accounts [in the UK] but that doesn’t make them defunct.

born_again

Band7 said:

There doesn’t appear to be any information on credit reference files about reason/method of closure, or who initiated it. At least I can’t see any.

Individual banks are likely to retain closure information. Whether and how they use this information is a different matter, and almost certainly depends on the reason for closure.

CIFAS is where the info is held.

Banks do hold closure data & will be shared within their groups.

Many accounts that get opened & then closed after a couple of days, will be due to something either on CIFAS or something that the customer has not quite told the truth on or thrown up a error, when the acc opening data is checked by a human, rather than the computer saying OK.

DullGreyGuy

RG2015 said:

DullGreyGuy said:

RG2015 said:

DullGreyGuy said:

RG2015 said:

A bank can close a bank account without giving a reason. They can also close an account for irregularities without providing any evidence. This second point is based on a post on another thread today and I see no reason to doubt it.

My question is whether there is any evidence of a bank doing this to a completely innocent customer?

Banks, like all businesses, are free to choose who they want and dont want as a customer as long as its not due protected characteristics (race, sexual orientation etc). 

Had a joint loan with an ex that I'd taken on payments for when we split, whilst it was fully paid up to date and only had a couple more months to run but it appears the ex got into financial difficulties and was told they were closing both the loan account and my current account that was in my sole name. On the plus side they did say they'd write off 50% of the loan if I could repay it in full... unfortunately no such offer for the small interest free overdraft that I happened to be in as it was close to payday. Though it was "her fault" the account was being closed because she wasnt named on it they wouldnt give any settlement offer. 

I am unhappy with the possible consequences of the point in your first paragraph. Banks have a duty of care to every one of their customers regardless of protected characteristics.

If a bank were to close an account of an innocent customer they may suffer financial hardship or discrimination as a consequence. Many people believe there is no smoke without fire.

Why not look at how the Ombudsman treats this matter:

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/banking-and-payments/bank-account-closures



How do you think an account being closed can result in hardship? Unless it’s for fraud or because of threatening behaviour to staff then the ombudsman expects customers to be given at least 30 days notice which they believe is reasonable timescales for someone to open a replacement account. For the statutory basic account the notice has to be 2 months and there are a set list of grounds on which they can be cancelled

I assumed that closing an account for suspected fraud may leave a marker on your financial / credit record.

Suspected fraud is not fraud. Note the case mentioned on post no. 2. The closed account holder was innocent other than by association with suspected fraud.

But even if the credit history was unaffected, significant inconvenience plus possible psychological anguish is hardship in my book.

Not directly, credit records are about credit and so it will simply say if it was closed with all debts paid or closed with debts being written off.

CIFAS is the main store of FS fraud data, it can be accessed via CRAs for basic searches and instant decisions but if something goes to the counter fraud department then they'd access the data directly with CIFAS not via the CRA.

There are secondary databases like National Hunter that is about application fraud but they are more about identifying someone who's suddenly said their salary has gone up £100,000 -v- the loan they applied for last week rather than the outcome of investigations.

CIFAS is covered by the DPA/GDPR like any other company and you can do a DSAR to see what information they hold and there is a complaints process if you feel the information held is incorrect.  

Someone who's account is closed because they are a financial associate of a fraudster is likely to be given notice and not have any markers added to CIFAS

eskbanker

born_again said:

Band7 said:

There doesn’t appear to be any information on credit reference files about reason/method of closure, or who initiated it. At least I can’t see any.

Individual banks are likely to retain closure information. Whether and how they use this information is a different matter, and almost certainly depends on the reason for closure.

CIFAS is where the info is held.

Banks do hold closure data & will be shared within their groups.

Many accounts that get opened & then closed after a couple of days, will be due to something either on CIFAS or something that the customer has not quite told the truth on or thrown up a error, when the acc opening data is checked by a human, rather than the computer saying OK.

My understanding is that CIFAS holds markers placed there by institutions as a result of unlawful or inappropriate activity, but are you saying that every bank-initiated account closure results in some sort of CIFAS marker being recorded?  The premise of this thread is potential closure of accounts for no justifiable reason (albeit there's more discussion about the separate issue of visibility and transparency of reasons), but if every such closure results in a CIFAS marker then there's a visible reason every time, even if it entails jumping through some hoops to find it....

Band7

born_again said:

Band7 said:

There doesn’t appear to be any information on credit reference files about reason/method of closure, or who initiated it. At least I can’t see any.

Individual banks are likely to retain closure information. Whether and how they use this information is a different matter, and almost certainly depends on the reason for closure.

CIFAS is where the info is held.

Banks do hold closure data & will be shared within their groups.

Many accounts that get opened & then closed after a couple of days, will be due to something either on CIFAS or something that the customer has not quite told the truth on or thrown up a error, when the acc opening data is checked by a human, rather than the computer saying OK.

That's news to me. I did request my CIFAS report a few months ago, just out of curiosity. It was entirely clean. Not a sign of the several dozen current accounts I have closed / switched. I have never had an account closed by a bank, so can't say for certain whether they would report closures to CIFAS - but I doubt they would do so in cases which do not involve fraud of sorts. For example, HSBC notified me they'd close my Advance account due to inactivity if I didn't use it again in the next xx days. As I wanted to keep the account, I just used it for one transaction, so it has stayed open for now. I am sure that they would not have given me a CIFAS marker if I had left the account unused - and I am also sure you would agree that there are closures which will not be reported to CIFAS. None of the account switches would be reported to CIFAS either, and none that the bank closed on customer's request.