Bank account closures

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.

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 Payment Services Regulations
  • the Payment Accounts Regulations
  • 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. For example, on current accounts we’d usually expect you to give them at least two months’ notice.

We’d only expect you to give a customer less than two months’ 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 the terms say an account’s notice period is less than two months, we’d still usually expect you to have allowed the customer enough time to make alternative arrangements before closing the account.

Notice periods for business bank accounts

Some business bank accounts aren’t covered by regulation. The notice period for closure is usually set out in the account terms. 

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.

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 account closure within 8 weeks. Where the complaint is about termination charges or insufficient notice, the final response should be given 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.

Once a complaint has been referred to us, we will ask you to provide information about your side of events. 

The typical information we would normally expect to see about this type of complaint for includes:

• a clear explanation of why an account was closed
• evidence to support the rationale for closing an account
• evidence to show if an account closure relates to statutory, regulatory and legal obligations
• if any funds have been held or released to the customer including any benefits/salary payments
• a copy of any internal policies relevant to the account closure 
• the type of account closed for example, basic, current or savings. If a basic account has been closed, the term that has been relied on to do so
• terms and conditions of the account
• a copy of the notice to close letter and details of how much notice was provided
• evidence to show if the customer had access to the account during the notice period
• customer contact notes
• account statements

We may ask for further information or documents, depending on the circumstances of the case.

Read more about how we handle complaints.

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 or you didn’t give them enough notice, we’re likely to tell you to pay them compensation if that caused them distress or 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.