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My business accounts were closed without explanation. This seems unfair, what can I do?



I have been with Lloyds bank for 40 years, and with Halifax for at least 20. I run a pub so I am always dealing with cash.

I paid £5,000 into my Halifax account in January and again in February which was my wages from the pub which I paid in cash.

The money was queried by the cashier and I explained as above. He told me that I can’t use my deposit account as a business account and I had to explain a couple of times that I wasn’t, I was paying my wages by cash to save going to the bank and then making a transfer.

Two weeks later I received a letter from Lloyds, and then an identical one from Halifax saying my accounts would be closed.

I went in to the Halifax and he told me that there was nobody to speak to about it, I had to close my account.

I am assuming it is because of the cash, I can’t think of anything else. I use my Lloyds current account for general payments, mainly Paypal payments. My Halifax is a deposit account.

I am so upset and annoyed that I have no choice and no-one has the decency to explain.

I have applied to Triodos Bank online to open an account with them as they came out top for ethical banking, but I’m still cross that I have to do this. Why has this happened? Is there anything I can do?

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Grace says: Having not one – but two – bank accounts closed is incredibly frustrating, especially as they contain the majority of your funds.

It is especially infuriating when you are given no reason for the decision and instead are left to play at guesswork for an answer.

As you are a landlord of a pub, you are often dealing with cash, and therefore, often pay in to your bank account this way.

However, you have never occurred an issue with doing so until this time.

On this occasion you were told it would not be possible to deposit the cash.

Not long after, you received two near identical letters from Lloyds and Halifax, both run by the Lloyds Banking Group, which said it was “unable to maintain a banking relationship with you”.

It added you need to make alternative banking arrangements as the accounts will both be closed within 65 days.

No reasons or explanation were given for doing so.

After contacting both Halifax and Lloyds, you were advised there was nothing either could do and that the decision was final.

Obviously, this was very confusing and concerning, especially given your long relationship with both banks.

Despite this, the rules actually say that banks and building societies are able to close accounts without warning or explanation.

The Financial Ombudsman Service (FOS) has said account closures should always be carried out in line with the bank’s terms and conditions, and in some cases this allows the bank not to provide details of their decision to close an account.

When an account has been closed in error, the bank would usually explain this to their customer, however the bank’s decision to do so depends on the circumstances of each individual case.

If a consumer is unhappy, they should make a complaint to their bank. If they remain unhappy with the banks response, or how the bank has dealt with their case, they are able to bring a complaint to the service and they may be able to help.

I contacted Lloyds to find out, in this case, why it had blocked the accounts but it would not give any information.

A Lloyds Banking Group spokesperson said: “In line with our account terms and conditions we may occasionally make the decision to close an account. Customers are given notice and are able to contact us to appeal the decision.”

Unfortunately, in this scenario, I wasn’t able to help you reopen your business accounts but I think it was an important story to note as I have heard from several other people in the same situation.

It seems this is a common case with many law-abiding citizens finding they are treated like criminals without explanation.

One other reader who got in touch said his business account was frozen by NatWest without explanation, leaving him without thousands of pounds of funds.

Again, he was left without access to a bank account with no explanation after asking multiple times as to why.

I spoke to Martyn James of free online complaints tool Resolver to find out how this is possible.

He said: “There’s no one rule, regulation or piece of legislation that governs account closures.

“It’s a mix of different things, brought together under what used to be the Banking Code (agreement of standards between banks) and the BCOBS (Banking Conduct of Business Sourcebook from the FCA).”

These combination of rules state your bank can terminate your relationship without having to give a reason.

Consumers must be given a notice period, generally held to be 30 days, so you can make alternative arrangements and this may be longer for business accounts.

However, it may be less if there is either fraud or threats of violence.

But experts say this is not always a fair and foolproof system.

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Mr James added: “For anything but money laundering, there’s pretty much no reason why your bank can’t tell you why it’s shutting your account. If it’s suspicious transactions, it doesn’t want to get sued, but as above, you can counter any unusual transactions and see if that over-rides the decision.

“With other factors, I’d like the banks to just be a bit more honest. If you’re not using the account much, or you only use free services and no products, then they can be honest about that.

“The problem is, these decisions have got to be fairly applied to everyone. It should also state the banks policies on account closures on its website too.”

Do you have a reader query, concern or a financial issue you want addressed? Contact: grace.gausden@inews.co.uk

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