Banks ‘could also be wrongly closing accounts or silently marking them for fraud’, shopper group warns

Banks could also be wrongly closing prospects’ accounts or silently marking them for fraud considerations, a shopper group has warned.

Data, obtained by Which?, exhibits the Financial Ombudsman Service (FOS) obtained greater than 1,380 complaints about present account closures within the 12 months 2022-23.

1 / 4 of the complaints have been upheld, in response to the info.

Which? says the figures present banks aren’t at all times taking adequate care to keep away from closing down the accounts of harmless prospects.

The shopper group additionally warns that banks could also be silently making use of markers in opposition to prospects’ names on the Cifas nationwide fraud database if they think fraudulent exercise.

This might go away prospects unable to open new accounts or entry different monetary merchandise, with out them figuring out the rationale, Which? warns.

It comes after former UKIP chief Nigel Farage – in a separate situation – sparked a row by claiming that his checking account with Coutts had been closed due to him being a “politically exposed person”, or PEP.

The BBC later reported that the rationale for the withdrawal of companies was as a result of Mr Farage falling below the level of wealth required by Coutts – one thing the Brexit campaigner didn’t deny.

In response to the row, City minister Andrew Griffith wrote to the Financial Conduct Authority (FCA), urging it to prioritise an “important” evaluate into whether or not individuals are being denied banking companies as a result of their political opinions.

The Treasury has additionally requested the FCA to evaluate the present guidelines about account closures and publish its findings, together with any suggestions.

Which? stated it recognises the significance of banks being able to shut accounts shortly within the fightback in opposition to fraud.

But the buyer group added that it needs higher communication to prospects on “what they need to do to challenge decisions, and fairer reviews by banks of these decisions – rather than leaving customers to have to take their claim to the ombudsman”.

Deputy cash editor of Which?, Sam Richardson, stated: “Having your bank account closed without warning can be an incredibly stressful experience – not least at a time when millions of households are struggling to pay the bills.”

The shopper group says those that consider their checking account has been unfairly closed ought to try to make various preparations for his or her funds to keep away from charges or prices.

They also needs to make a criticism to their financial institution and make an information request to Cifas on-line to examine for a marker, which they’ll then contest.

Read extra:
What happened with Nigel Farage’s account?
UK Finance says accounts should not be shut for political reasons

If that fails, prospects might then try to make a criticism by means of the FOS, Which? stated.

Customers who efficiently make a declare might not have their account reopened, the buyer group warned, however they may obtain compensation and an apology.

A UK Finance spokesperson stated any resolution to shut an account is barely taken after an “extensive review and analysis of the activity on the account” and every case is handled on “an individual basis”.

“Banks are required to adhere to legal requirements when assessing criminal activity and in every case, the bank must always ensure the customer is treated fairly,” the spokesperson stated.

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A spokesperson for Cifas stated: “Evidence to support markers must be robust and meet our standard of proof, and there are strict rules and guidance around the use of markers in automated systems.

“Out of tons of of 1000’s of instances, we acknowledge that sometimes our members will place a marker the place a shopper believes that is incorrect.

“There are clear processes in place for individuals to make an appeal and, where necessary, we are able to carry out an independent investigation and have cases removed or amended without the need to involve the Financial Ombudsman.”