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

Nigel Farage, a vicar who complained a few 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 government 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 government 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 an extended record of causes and are typically not legally required to say why.

This may cause confusion and monetary issues for many individuals, particularly after they consider they haven’t achieved something incorrect. But the foundations for account closures are clear. Here, Telegraph Money explains every little thing you want to know. 

Politically uncovered?

Under the cost accounts laws, banks can shut an account for an extended record 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 data was given when making use of for the account or the account holder is now not legally a resident of the UK.

There can also be elevated scrutiny from banks relating to politically uncovered folks – comparable 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 particular person is extra inclined to being concerned in bribery or corruption due to their occupation or place.

Under money-laundering laws, banks are required to use enhanced due diligence to politically uncovered people to make sure that they don’t seem to be 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 provide this as a motive to the account holder.

In 2018, the Financial Conduct Authority, the City watchdog, mentioned 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 could be very little recourse for a politically uncovered one who finds their accounts have been closed. More usually than not, they don’t seem to be 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 search 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 must let you know why your account has been closed, and also you solely have to be suspected of fraud – and never convicted – for a financial institution to shut the account. 

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

If you observed that you’ve got been a sufferer to identification fraud (when somebody opens an account and steals cash in your title) then you will need to contact your financial institution as quickly as doable to alert them and so they can start to research.

The similar 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 identification theft. They ought to do that as quickly as doable, ideally by the tip 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, mentioned: “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 if in case you have did not repay loans or credit score, and/or have a bad credit report historical past.

When a financial institution closes an account it typically 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 could give these money owed to a credit score restoration company for them to chase, which is able to 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 stability, then that can also 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 could shut the account if in case you have 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 provide you a motive why your account has been closed.

If you have got been suspected of fraud, cash laundering or being a politically uncovered particular person, it’s seemingly you’ll both not be capable to open one other account, or must 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 incorrect motive, or you don’t agree with the choice. 

First and foremost: contact your financial institution, particularly if in case you have been beforehand notified of the closure. Doing so means you have got a larger likelihood 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 also be vitally vital.

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

Unless suspected fraud or one other critical offence is the rationale 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 typically must 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 as a result of 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 must 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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