• Account Closure Complaints: Over 1,380 complaints about current account closures received by FOS
• Banks’ Actions: Banks may inadvertently close accounts or flag them for fraud suspicions
• Consumer Group’s Warning: Which? warns of potential consequences for consumers, including restricted access to financial products

According to Which?, the Financial Ombudsman Service (FOS) received over 1,380 complaints regarding current account closures in 2022-23, of which one-fourth were upheld.

A consumer group has warned that banks may inadvertently close customer accounts or mark them for fraud suspicions.

According to information acquired by Which?, the Financial Ombudsman Service (FOS) received over 1,380 complaints regarding current account closures in 2022-23.

The data indicate that one-fourth of the complaints were upheld.

According to Which? the numbers indicate that banks do not always take sufficient precautions to avoid closing the accounts of innocent consumers.

The consumer group also warns that if banks suspect fraudulent activity. They may apply identifiers to customers’ names in the Cifas national fraud database.

Which? warns that this could prevent consumers from opening new accounts or gaining access to other financial products without their knowledge.

Former UKIP leader Nigel Farage said Coutts stopped his bank account because he was a “politically exposed person” (PEP).

In response to the controversy, City Minister Andrew Griffith urged the Financial Conduct Authority (FCA) to prioritize an “important” inquiry into whether banking services are being denied to individuals based on their political beliefs.

The Treasury also wants the FCA to evaluate account closure restrictions and publish its findings and suggestions.

Which? acknowledged the significance of banks being able to swiftly close accounts in the fight against fraud.

The consumer group added that it wants improved communication with customers about “what they need to do to challenge decisions” and fairer reviews of these decisions by banks so that customers do not have to go to the ombudsman with their claims.

Sam Richardson, deputy money editor of Which?, stated, “Having your bank account closed without notice can be a very stressful experience, especially when millions of households are struggling to pay their bills.”

If a bank account was cancelled unfairly, the consumer group advises making alternate payment arrangements to minimise fines.

Additionally, they should file a complaint with their bank and submit an online data request to Cifas to check for a mark that they can contest.

Which? stated that, if unsuccessful, consumers could then attempt to file a complaint with the FOS.

The consumer group warned that successful claimants may receive compensation and an apology but not account reopening.

A spokesperson for UK Finance also stated that any decision to terminate an account is made only after an “extensive review and analysis of the account’s activity” and that each case is handled “on an individual basis.

“Banks are required to adhere to legal requirements when evaluating criminal activity. And they must always treat their customers fairly,” the spokesperson said.

A spokesperson for Cifas stated, “Marker-supporting evidence must be robust and satisfy our standard of proof. And the use of markers in automated systems is governed by strict rules and guidelines”.

Out of hundreds of thousands of situations, our members may set a marking where a consumer believes it is inappropriate.

“There are clear procedures in place for individuals to file an appeal, and if necessary, we can conduct an independent investigation and remove or amend cases without involving the Financial Ombudsman.”