Business & Finance0 min ago
Bank Account Closed
8 Answers
I am a director of a small business and have today received a letter from our bank, with whom we've had an account since we first started approx a year ago, they have said that after carrying out a review of our account they ' no longer wish to provide banking facilities to us'. They require us to make alternative banking arrangements and the account will be closed in 30 days. They will not enter into any further discussions regarding the matter and they will not be in a position to provide any references on our behalf.
I am completely gobsmacked, we've never been in debt with the bank and never even needed an overdraught, such was the tone of the letter I half expected the fraud squad to come knocking on the door. I phoned our bank business manager and he said he was very sorry but was not allowed to discuss the matter.
I am obviously going to need to open an account elsewhere but wondered if anyone could shed any light into why the bank would make such a drastic, totally out of the blue, decision as this.
I am completely gobsmacked, we've never been in debt with the bank and never even needed an overdraught, such was the tone of the letter I half expected the fraud squad to come knocking on the door. I phoned our bank business manager and he said he was very sorry but was not allowed to discuss the matter.
I am obviously going to need to open an account elsewhere but wondered if anyone could shed any light into why the bank would make such a drastic, totally out of the blue, decision as this.
Answers
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Absolutely no idea - if you have never been outside your overdraft facility it is weird.
Some banks may have a policy of not giving bank accounts to higher risk businesses. I know that a few years ago, Abbey National (as was then) would not give a business account to taxi drivers.
Do you have an authorised overdraft facility? If so the lending department may have said that they wish to review all new businessses who have an overdraft.
Or do you take a lot of cash? If so, they may feel that you may be money laundering? If all what you say above is true, then I too am at a loss to explain the situation.
If / when you go to a new bank, take all your bank statements with you - this is better than a bank reference as they can see exactly how you run your account.
All I can say is that I fell out with NatWest over business banking - they would not give me a �500 charge card for my business account as it was a new account, despite having a �6000 overdraft on my personal account, a personal credit card with a �4000 limit and my mortgage with them with �120,000 worth of equity! I told them what they could do with my business account and promptly changed to Lloyds TSB.
Sorry that I can't help anymore or throw any more light on this for you. Will watch this with interest though
There must be some genuine reason : maybe you've operated the account too well and they're making no profit from you? (joke!) Maybe they weren't happy with the ID (or references?) you provided on opening the account. Maybe it is more along the lines of suspicion of fraud/money laundering : are there lots of cash transactions in and out? If they say "we can't tell you" then this is the type of thing that they can't divulge.
Also, ignore the "banking ombudsman" advice : you firstly have to exhaust the bank's own complaints procedure before you can go anywhere near the ombudsman. Query this or complain in writing and you will be guaranteed a written response : the bank have a certain timescale that they have to respond this this by.
p.s. The Abbey taxi driver thing was also partly to do with reducing the amount of coins that branches were having to deal with. It's apparently a Health and Safety issue for the precious wee cashiers having to lift bags of 20p's.
Also, ignore the "banking ombudsman" advice : you firstly have to exhaust the bank's own complaints procedure before you can go anywhere near the ombudsman. Query this or complain in writing and you will be guaranteed a written response : the bank have a certain timescale that they have to respond this this by.
p.s. The Abbey taxi driver thing was also partly to do with reducing the amount of coins that branches were having to deal with. It's apparently a Health and Safety issue for the precious wee cashiers having to lift bags of 20p's.
Thank you for your help, still hard to fathom as all payments into our account are by cheque or baccs, even though they can be large amounts ( circa 10k max). I also phoned a financial advisor who confirmed the Natwest were within their rights to do this - I am now meeting TSB on Monday who will hopefully open a new account for us. It is very frustrating when you have no idea why this has happened and causing a lot of upset getting things re set up ready for our next wages run etc.
Under the Data Protection Act 1998, there is the right for individuals to make a rquest for access to personal information held by other organisations. I'm not sure about a business or an organisation making such a request about themselves. There is an Information Commissioner's Office,and here it tells you how to contact it.
Usually these types of letters are sent to people/companys who aho abuse their accounts either by regularly overdrawing the account without authorisation or lots of bounced cheques/unpaid DD's & S/O's.
If this is not the case for you then its becase they either believe the risk of fraud is high/they have information on one of the signatorys of the account which is detrimental or lastly that someone in the company had been rude/abusive or threatning to a staff member.
I've worked in Banking for many years and its almost certainly going to be one of these options - and yes, its perfectly legal for them to provide you notice to close.
Pesonaly speaking, it sounds as though the fact that your small business advisor cant discuss the matter then its more likley the possible fraud or abuse scenario.
If this is not the case for you then its becase they either believe the risk of fraud is high/they have information on one of the signatorys of the account which is detrimental or lastly that someone in the company had been rude/abusive or threatning to a staff member.
I've worked in Banking for many years and its almost certainly going to be one of these options - and yes, its perfectly legal for them to provide you notice to close.
Pesonaly speaking, it sounds as though the fact that your small business advisor cant discuss the matter then its more likley the possible fraud or abuse scenario.
While it's been suggested that the Data Protection Act might be of assistance to you, it should, perhaps, be pointed out that it's probably this same Act which is the reason behind the 'vagueness' of the letter which you've received.
If it comes to the bank's attention that there is some reason why they might wish to discontinue the account (e.g. if they find out that a signatory has a poor credit rating, a conviction for fraud or is barred from holding directorships) they are not allowed, under the DP Act, to divulge the relevant information or to give any indications which might lead you to identify the person and reasons involved.
Before your meeting with the TSB you should have a discrete word with everyone who is a signatory or guarantor for the account to try to prevent the same problem occurring again.
Chris
If it comes to the bank's attention that there is some reason why they might wish to discontinue the account (e.g. if they find out that a signatory has a poor credit rating, a conviction for fraud or is barred from holding directorships) they are not allowed, under the DP Act, to divulge the relevant information or to give any indications which might lead you to identify the person and reasons involved.
Before your meeting with the TSB you should have a discrete word with everyone who is a signatory or guarantor for the account to try to prevent the same problem occurring again.
Chris
If there was a problem with one of the signatories on the account, this would have been picked up at the outset and the account would never have been opened. Everyone is thoroughly checked out before they are allowed to act as a signatory.
Is your business connected with mobile phones at all? I ask becasue there is a large article in our local newspaper today, about how Banks are all getting scared of the high risk and potential for fraud involved in the mobile phone industry. There are interviews with many small business who have had their accounts closed by their Bank with no warning and no reason given - it sounds similar to your situation.
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