Huy and Chiyo's bank closed their business bank account earlier than they said they would –disrupting their finances and operations.
What happened
Huy and Chiyo – a couple running a small business together – struggled with cashflow. They often went overdrawn by small amounts and paid fees to their bank, which allowed them to continue to overdraw.
When a new bank manager took over, she told Huy and Chiyo that they wouldn’t be allowed to do this anymore. Despite meeting the manager to discuss the situation, she refused to change her mind. A few days later, she wrote to them and told them their account would be closed in two months.
But before they could organise a new business bank account, their existing account was closed weeks earlier than they had been told. This caused several payments to fail, leading to a lot of problems.
Huy and Chiyo had to pay extra interest and late charges on their credit cards, which should have been paid by direct debit. Plus, one of the interrupted payments was to their business’s main supplier. This led to him shortening their credit term from 30 days to seven. For months, the supplier only accepted cash payments from them, putting more pressure on their cash flow.
Huy and Chiyo complained to the bank, saying they’d lost £5,000 because of the early closure. They also asked for an additional £2,500 as compensation for the anxiety and professional stress the situation had caused.
While the bank admitted that the account had been closed early by mistake, it offered them £300 in compensation. Huy and Chiyo were unhappy with this, so they brought their complaint to us.
What we said
Our investigation confirmed that Huy and Chiyo had reasonably expected the bank to make the interrupted payments. If the payments had been made, the couple would’ve avoided charges adding up to £150.
We also agreed that the early account closure had significantly impacted their business. The missed payment to their main supplier disrupted their trading and their cash flow, and we valued this damage at £4,000.
We determined that, although the bank had caused stress and confusion, the £7,500 requested was too high a figure. Instead, we recommended the bank pay £4,750 in total.
We also asked the bank to write a letter to Huy and Chiyo, acknowledging its mistake and explaining the situation. The couple could then give a copy of this letter to their supplier and credit card providers to help repair the professional relationships affected by the early account closure.