Business complains after bank closes the wrong account

Banking SME Distress and inconvenience Up to £1,500

After their bank closed the wrong bank account, C Limited had to do a lot of work to retain their customers who had their direct debits affected, as well as deal with damage to their reputation online. The bank offered £500 in compensation, but C Limited didn't think this was good enough and came to us for help. 

What happened

C Limited instructed its bank to close one of its dormant accounts. The bank wrongly closed its active business current account. This led to the cancellation of nearly 40 direct debits set up under that account. There were also further administrative errors by the bank when reopening the account.

C Limited became aware of this when its customers said that they’d received notification that the bank account was being closed. C Limited said that this resulted in great embarrassment and reputational risk. C Limited had to contact all 40 of the companies it was paying to set up new direct debits. This meant there was no financial loss, but C Limited said that this seriously disrupted the business. It also led to several adverse reviews being left on a well-known trade website, which C Limited had to fight to get removed. They were removed eventually but they had been available to read for several weeks.

The bank offered £500 for the inconvenience this matter caused C Limited, but this wasn’t accepted.

What we said

In looking at the impact to C Limited, we thought that having to call 40 companies to explain what had happened and set up new direct debits would have taken a significant amount of time. C Limited estimated that its staff spent roughly 40 hours doing this.

We explained that in cases like this, we don’t make awards based precisely on units of time spent by the company’s staff but instead we look at the overall impact the bank’s mistake had on the company. 

We were satisfied that there was also an impact to C Limited’s reputation as its customers were alarmed to find out that C Limited’s account was closing. We also accepted the negative online reviews had likely been read by customers - so understood why C Limited felt this had unfairly damaged its reputation.

We decided that the company was caused serious disruption by the bank. And there were multiple errors which meant the impact continued for some time. We decided that £1,500 compensation would be fair in all the circumstances of the complaint.