With the furore about Coutts closing Nigel Farage’s bank account, there are a definite increase in people asking if a bank can just close their current account.
This sorry episode led the fall of the boss of NatWest and Coutts, a situation that never should have happened.
That boss may have been very effective, but if they didn’t know discussing an account holder by name with a journalist wasn’t a bad move, they didn’t deserve the job.
Even if they never mentioned financial information, it’s still incredibly bad form.
Anyway, back to the matter at hand, can a bank close your current account without your permission?
Can your bank close your current account?
The short answer is yes, your bank can close your account without your permission.
However, it isn’t as cut and dried as that.
Usually, a bank needs cause.
For example if you’re being investigated for a financial crime, if you abuse bank staff, break the terms and conditions or the bank has been ordered to as part of an investigation.
The Financial Ombudsman Service (FOS) guidelines for banks say: “You don’t have to explain to a customer why you’ve closed their account, but it can be helpful to do so.”
So your bank can definitely shut you down without your permission but not for having different political views or for having a public profile the bank doesn’t agree with.
What happens if a bank closes your account?
If a bank does decide to close your account, it should notify you at least a month ahead of time.
That’s changing with the government’s proposed new rules, but it’s a month right now.
The bank doesn’t have to tell you why, just that it’s closing it and that you should find a new bank.
If that closure is to do with an investigation, your account may be frozen ahead of time to preserve evidence.
You can still make payments in but are unlikely to be able to withdraw anything until it’s unfrozen.
What should you do if your bank closes your account?
If you find yourself in Nigel’s position and your bank closes your account, your first step is to contact the bank and ask why.
Then you need to raise a complain and ask for a full explanation as well as lodge your protest. The bank has up to 8 weeks to answer your complaint.
If you don’t get a satisfactory response, complain to the Financial Ombudsman Service.
You’ll need to include all paperwork from the bank relating to the closure and the response letter from your complaint.
Will I be able to get an account elsewhere?
You may be able to get an account elsewhere, much depends on why it was closed.
If it was closed due to suspected criminal activity, fraud, money laundering and so on, you may find it difficult to get another account.
If it was closed through you being threatening or abusive to bank staff, you will find it difficult to get a bank account elsewhere.
If it was closed due to something outside of your control, you should be able to get a bank account elsewhere.
If all else fails, you should be able to get a basic bank account. Everyone in the UK has a legal right to a basic account and they are offered by most High Street banks.
The only exception to that is if you’re suspected of a financial crime, cannot pass an identity check or have been threatening towards bank staff.
What are those government changes you mentioned earlier?
The government is planning changes to the banking system after the Coutts/Nigel Farage situation.
First off, banks will need to provide 90 days’ notice for any account closure.
This will give you time to complain, work with the FOS and find a new bank account.
Banks will also have to provide reasons they are closing your account. The obvious exception is for links to criminality, but for all other issues, you should be told.
Banks closing accounts
The Coutts/Nigel Farage situation was a bit extreme. It doesn’t make good business sense to close accounts without good reason as banks make money from us.
Plus, after this, banks are going to be extra careful about closing accounts without good reason!
If you do find yourself in this situation, contact the bank, ask why, raise a complaint and notify the Financial Ombudsman Service.
It’s not a nice situation to be in but there’s always something you can do and another bank that will be willing to take your money!
