Banking, investments and credit FAQs
Answers to frequently asked questions relating to banking, credit, mortgages, investments and financial service fraud.
The Financial Conduct Authority (FCA) reviewed payment account closures in September 2023. It found the most common reason for closing or suspending an account was because the account was dormant or there was concern about the account being used for financial crime.
Banks are legally required to close accounts when they suspect it may be used for financial crime. Part 7 of the Proceeds of Crime Act 2002 requires banks to monitor and respond to “suspicious” activity on accounts. Where they have suspicions they must report and freeze the account and follow advice from the National Crime Agency.
Banks are required to close bank accounts if they cannot complete ‘know your customer’ checks required by The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. There is anecdotal information that this is the reason for closures of some charity and small business accounts.
Banks may suspend or terminate accounts for other reasons, including choosing not to service customers who are based outside the UK.
Legal requirements on banks when closing accountsWhile banks are generally free to close customer accounts, they must not discriminate against customers based on protected characteristics outlined in the Equality Act 2010.
Additionally, banks can’t discriminate against retail customers based on characteristics outlined in the Payment Accounts Regulations 2015.
Generally, banks must provide notice of the decision to suspend or terminate an account. However, if a bank is concerned about an account being used for financial crime, Section 333A of the Proceeds of Crime Act 2002 makes it an offence for the bank to tell anyone (even the customer concerned) that such an investigation is taking place if it may affect the investigation.
More details on the regulatory framework around account closures is provided in chapter 3 of the FCA’s report on payment accounts.
What can I do if this happens?Customers who have their bank account closed or terminated may wish to understand from their bank the reason why before deciding on a course of action.
Customers whose account was closed because they are no longer resident in the UK could explore a range of expat accounts.
Where a bank chooses to close an account because of a customer’s financial situation, such as their credit rating, they may wish to look at basic bank accounts which the largest UK banks are obliged to offer retail customers (though not business customers).
Basic bank accounts aren’t available to businesses, though charities may find the industry body UK Finance’s guide on how to open a charity bank account helpful.
Where there are financial crime concerns, this may stem from a customer not providing up-to-date details about the individual or organisation in whose name the account is held.
If a customer feels they have been treated unfairly they may wish to make a complaint to their bank and, possibly escalate this to the Financial Ombudsman Service.
What's been done to protect access to cash?The Financial Services and Markets Act (FSMA) 2023 gave the FCA powers to oversee and ensure continued provision of cash deposit and withdrawal facilities to individuals and businesses.
In practice, this means large banks must conduct cash access assessments in response to trigger events. These events are:
- A bank’s decision to close a cash facility or materially reduce cash access services,
- A non-bank's decision to close a cash facility or materially reduce cash access services (such as an independent ATM deployer removing an ATM), or
- A cash access request from the public
These assessments are conduct by LINK, the ATM network operator run by banks. If LINK finds a planned closure would cause an unacceptably low level of access to cash, it can recommend new services be put in place. Banks will have to put these in place before closing other services.
It’s important to note that the arrangements are limited to deposit and withdrawal facilities – they do not extend to wider banking services.
How can I challenge information in my credit file?Consumers who believe that there is incorrect information on their credit file may raise the matter with the relevant credit reference agency (CRA) – each provides contact details on their website.
As they rely on information from lenders and others, they may advise consumers to raise it with the firm that provided the information too. The Information Commissioner's Office says CRAs can’t amend data on credit files provided by other companies without that company’s permission.
CRAs won’t remove adverse information if it’s correct, although consumers may ask to submit a “notice of correction” note to explain the circumstances.
The CRA should remove the information or explain why it won’t within 28 days, according to MoneyHelper.
Other topics addressed in this briefing Complaints and compensationComplaining to financial businesses and the Financial Ombudsman Service and the role of the Financial Services Compensation Scheme.
Banking servicesArrangements for bank branch closures, protecting access to cash, ID requirements for opening accounts, and banks’ and customers’ rights when accounts are closed or frozen.
Fraud and scamsApproaches to reclaiming money lost in scams and arrangements for compensating losses from authorised push payment (APP) scams.
CreditWhat credit scores are and how they work, how to find out what’s in a credit report, how to challenge incorrect information held in them and what's happening with motor finance complaints.
MortgagesSupport available to people finding it hard to meet rising mortgage repayments, and specific support for mortgage prisoners and those with shared appreciation mortgages.
Child Trust FundsHow to track down a fund and access a fund on behalf of a young person lacking mental capacity.
Other Commons Library resourcesThe Library publishes further and related information in: