Bank account closures

Businesses that provide bank accounts are generally entitled to close them – just as their customers are. But you should treat your customers fairly. You shouldn’t close an account because of unfair bias or unlawful discrimination. And you shouldn’t usually close an account without giving reasonable notice.

Types of complaints we see

Customers may complain that you’ve closed their bank account unfairly. This might be because you:

• made a factual or administrative mistake
• gave them conflicting information or advice
• discriminated against them
• didn’t follow your own procedures properly
• didn’t give them enough notice

You don’t have to explain to a customer why you’ve closed their account, but it can be helpful to do so.

What we look at

We’ll look at:

• what’s fair and reasonable
• any relevant rules, guidance and good practice, including:
  • the Banking Conduct of Business Sourcebook (BCOBS) in the Financial Conduct Authority Handbook
  • the Standards of Lending Practice, where an account is overdrawn
• what you’ve done to support your customer if:
  • their account is overdrawn
  • they’re in financial difficulty
• the account’s terms and any specified notice period
• the type of account

Notice periods for personal bank accounts

If you intend to close a personal bank account, you should usually give your customer reasonable notice so they can make alternative arrangements. We’d usually expect you to give them at least 30 days’ notice.

We’d only expect you to give a customer less than 30 days’ notice in exceptional circumstances. This might be where:

• you suspect them of fraud
• they were threatening or abusive to your staff

We’ll check whether the terms of the customer’s account specify a notice period and what the terms say about the circumstances in which you can close an account. If an account’s notice period is less than 30 days, we’d still usually expect you to have allowed the customer at least 30 days’ notice before closing the account.

Notice periods for business bank accounts

A longer period than 30 days might be appropriate for business customers. They’re likely to need more time than personal customers to make alternative arrangements, particularly if there’s an agreed overdraft on the account.

Notice periods for basic bank accounts

Different rules apply about when you can close a basic bank account and how much notice you should give a customer. See regulation 26 of the Payment Accounts Regulations 2015.

Handling a complaint like this

When you’re looking at a complaint about the unfair closure of a bank account, think about your overall treatment of the customer. Take an objective view of what caused you to close their account, and consider whether that decision was reasonable.  

You should give your final response to complaints about payment services within 15 days. Find out more about time limits for businesses.

We only look at complaints that you've had a chance to look at first. If a customer complains and you don't respond within the time limits or they disagree with your response, then they can come to us.

Find out more about how to resolve a complaint.

Putting things right

Compensation for financial loss 

If you close a customer’s account without giving them enough notice, this might mean they fail to honour cheque, direct debit or standing order payments. In turn, this could lead to a direct loss in the form of interest or late payment fees, or there could be indirect losses, like damage to a customer’s reputation or adverse information on their credit file. 

If we decide you were wrong to close a customer’s account, or you didn’t give them enough notice, we’re likely to tell you to reimburse them for any direct costs.

If we decide that any indirect losses occurred because the customer wasn’t able to honour payments, and that you could have reasonably foreseen this when you closed the account, we’d generally expect you to compensate the customer. We'll base the amount on the individual circumstances.

Compensation for non-financial loss

If you close a customer’s account without giving them enough notice, they may suffer distress and inconvenience because they can’t access banking facilities and have to find a new account. 

If we decide you were wrong to close a customer’s account and you didn’t give them enough notice, we’re likely to tell you to pay them compensation for distress and inconvenience. We’ll base the amount on the individual circumstances. 

A direction

If you’ve wrongly closed an account, we can direct you to do something other than pay a customer compensation. This could be to reopen an account, if it’s appropriate to do so.