When banks can shut accounts – and what to do if yours is affected

Nigel Farage, a vicar who complained a couple of lender’s help of Pride, and a free speech group – they’ve all made headlines after their financial institution accounts have been shut down with little warning.

After acquiring paperwork from his earlier financial institution, Farage found Coutts closed his financial institution accounts as his views “do not align with our values”. NatWest, which owns Coutts, has since seen the departure of its chief govt Dame Alison Rose, after admitting she leaked non-public banking details about Mr Farage to the BBC. She has since forfeited £7.6m after NatWest scrapped her bonus entitlement and share awards.

It has sparked a backlash with banks accused of refusing clients due to their political views, elevating the query: what are your rights and what are you able to do when you fall sufferer?

Dame Alison Rose has resigned as chief govt of NatWest, which owns Coutts Credit: Dominic Lipinski/PA

A financial institution can shut an individual’s account at any time, with restricted discover, for a protracted checklist of causes and are usually not legally required to say why.

This could cause confusion and monetary issues for many individuals, particularly once they consider they haven’t carried out something unsuitable. But the foundations for account closures are clear. Here, Telegraph Money explains every little thing you’ll want to know. 

Politically uncovered?

Under the fee accounts laws, banks can shut an account for a protracted checklist of causes. 

These embrace if an individual has knowingly used, or tried to make use of the account for unlawful functions. The financial institution can even take motion if incorrect info was given when making use of for the account or the account holder is now not legally a resident of the UK.

There can be elevated scrutiny from banks relating to politically uncovered folks – corresponding to Brexiteer Nigel Farage.

Former UKIP chief Nigel Farage had his Coutts checking account closed Credit: Carl Court/Getty Images

Banks and different monetary establishments have to contemplate whether or not a politically uncovered individual is extra vulnerable to being concerned in bribery or corruption due to their career or place.

Under money-laundering laws, banks are required to use enhanced due diligence to politically uncovered people to make sure that they aren’t utilizing their establishment for money-laundering or accepting money from unlawful sources.

If they will collect sufficient proof to show this, they will shut an individual’s account – however, once more, they don’t have to present this as a purpose to the account holder.

In 2018, the Financial Conduct Authority, the City watchdog, stated it was conscious that “some banks no longer offer services to categories of customers they deem to be at high risk of money-laundering”.

There may be very little recourse for a politically uncovered one who finds their accounts have been closed. More usually than not, they aren’t allowed to open one other checking account with any establishment within the UK once more. 


Third-party investigative our bodies and credit score reference teams usually work with banks to seek out and scrutinise account holders who they think have dedicated monetary fraud.

A financial institution can shut an individual’s account if it, or a third-party, suspects they’ve dedicated, or been concerned in fraudulent exercise. 

Like most different causes for closing an account, the financial institution doesn’t need to let you know why your account has been closed, and also you solely must be suspected of fraud – and never convicted – for a financial institution to shut the account. 

If this occurs, then there’s a good probability you’ll not be allowed to carry a checking account once more with most British monetary establishments. 

If you believe you studied that you’ve got been a sufferer to id fraud (when somebody opens an account and steals cash in your identify) then you should contact your financial institution as quickly as potential to alert them and so they can start to research.

The identical goes for theft: for instance, if somebody steals your financial institution particulars or playing cards and withdraws or spends cash fraudulently.

According to Citizens Advice, a financial institution ought to refund any cash stolen from you on account of fraud and id theft. They ought to do that as quickly as potential, ideally by the top of the subsequent working day after you report the issue.

But a financial institution can refuse a refund in the event that they discover you acted fraudulently or have been “grossly negligent”: for instance, when you shared your pin or password with another person.

Alasdair Walker, a monetary adviser and founding father of discussion board UK Personal Finance, stated: “As soon as there is any suspicion of fraud taking place by an account holder and someone is on their list and has a ‘fraud marker’ they are ‘unbanked’ and they can no longer get a bank account in the UK.

“If someone was declared bankrupt, they could still get a basic bank account. But if a person gets a fraud marker, they are unable to get a bank account again. People don’t need to be convicted of fraud, they just need to be suspected of fraud to lose the ability to get an account. 

“Some people inadvertently become entwined in fraud, with money being transferred from family or friends and can still lose their accounts if it’s suspected fraud. That’s it, no bank accounts from then on.”


A financial institution can shut your account when you’ve got did not repay loans or credit score, and/or have a poor credit historical past.

When a financial institution closes an account it usually doesn’t have an effect on your credit standing. But if there may be an excellent overdraft or mortgage when it closes, the financial institution might give these money owed to a credit score restoration company for them to chase, which can have an effect on your score. 

If too many funds “bounce” out of your account as a result of there is no such thing as a steadiness, then that can be grounds for closure. 

Banks can even shut an account if it appears it’s dormant for too lengthy. Generally, it deems an account as “abandoned” if the account holder fails to make use of the account, or doesn’t contact the financial institution, for a number of years. 

Furthermore, if the account has contained no cash for a number of years, the financial institution might shut the account when you’ve got not replied to alerts or correspondence from the financial institution. 

What can I do if my account is closed?

To put it merely: not so much – particularly as a financial institution doesn’t have to present you a purpose why your account has been closed.

If you’ve got been suspected of fraud, cash laundering or being a politically uncovered individual, it’s seemingly you’ll both not be capable of open one other account, or should wait a really very long time to have the ability to. 

But, there are some easy steps you possibly can take when you consider your account has been closed for the unsuitable purpose, or you don’t agree with the choice. 

First and foremost: contact your financial institution, particularly when you’ve got been beforehand notified of the closure. Doing so means you’ve got a larger probability of discovering out why the account is closed, if it may be reopened or how one can retrieve any funds left within the account. 

Making positive you retain all written and on-line communications together with your financial institution can be vitally vital.

Second, halt all direct deposits and withdrawals arrange in your account quickly after you obtain discover concerning the closure. 

Unless suspected fraud or one other critical offence is the explanation the financial institution closed your account, you could possibly arrange one other account with a rival financial institution or converse to the financial institution about opening a brand new pre-paid or “second chance” account.

You can even complain to the financial institution, and to the Financial Ombudsman Service (FOS), when you consider the closure is unjust or unfair, however you usually need to show it.

The ombudsman can award compensation when you can show the financial institution didn’t present discover of the account closure, when you have been handled unfairly otherwise you misplaced cash because of the account being closed incorrectly.

A discover on the FOS web site says banks can shut accounts at any time when they need, however they nonetheless need to deal with their clients pretty. 

“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,” it says.


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