We looked into Huy and Chiyo's business account complaint when their bank closed their business account sooner than it said it would.

What happened

Huy and Chiyo ran a small business. Cash was always tight and they often went overdrawn on their bank account by small amounts, although they didn’t have a formal overdraft facility. In fact, their bank had refused to grant them an overdraft, but it did allow the unarranged borrowing Huy and Chiyo did do, and charge fees for this.

Shortly after a new bank manager took over, the couple found that the leeway they’d previously been allowed stopped without warning. They went to see the new manager, but she refused to budge. The meeting wasn’t cordial and a few days later the manager wrote to Huy and Chiyo to tell them to close their account by the end of the month – in four weeks’ time.

The couple set about finding a new bank. Meanwhile, the bank closed the account a few days earlier than it had said it would, which meant a number of payments were left unpaid.

The bank’s actions caused Huy and Chiyo a number of problems. They incurred extra interest and late payment charges on their credit cards, which should have been paid by direct debit. And one of the dishonoured payments had been to their main supplier. He immediately shortened their credit terms – from 30 days to one week. And for several months after that, he would only accept payment from them in cash.

Huy and Chiyo complained to the bank. They claimed direct financial losses of around £5,000, plus a further £2,500 for their distress and anxiety, along with the need to rebuild their relationship with their supplier.

The bank accepted that it had closed the account a little too soon. But it refused to accept that the couple had suffered anything like the loss or inconvenience they claimed. It offered them £300 in compensation. Huy and Chiyo were unhappy with this and complained to us.

What we said

We were satisfied that Huy and Chiyo had genuinely expected the bank to make several payments before the account was closed – and that this was reasonable given what the bank had told them about the closure date. If the payments had been made, the couple wouldn’t have incurred charges that amounted to about £150.

We also accepted that failing to pay their supplier had had a significant effect on Huy and Chiyo’s trading and cash flow. We valued this at £4,000. We also felt the bank’s actions had caused the couple unnecessary distress and inconvenience – but we felt they were claiming too much for this. 

Overall, we recommended the bank pay Huy and Chiyo £4,750. We also told the bank to provide them with a letter explaining that some payments hadn’t been made because of a mistake it had made. Huy and Chiyo then had the option of giving a copy of the letter to their supplier and credit card providers to explain the situation.