FCA gives tentative go ahead on Amigo’s compensation scheme
March 25, 2021FCA warns retail banks over money laundering
July 27, 2021Britain’s financial regulator has been urged to take action over the swathes of bank accounts being unexpectedly closed by some of the UK’s biggest lenders, which is leaving tens of thousands of account holders in misery.
Customers who have had their accounts frozen without warning have called on the Financial Conduct Authority (FCA) to intervene so that banks are forced to return money more quickly and those affected are not left financially destitute.
According to testimonies from account holders who contacted i, people have had to rely on food banks, handouts from family and friends and high-interest loans to get by when their accounts were unexpectedly frozen. In some cases readers said the closure of their accounts and the extreme difficultly they faced in trying to get their money back had left them feeling suicidal.
High street lender NatWest and digital bank Monzo are accused of being among the worst offenders, but a large number of complaints have also been made against Revolut, Monese and Pockit.
More than 5,500 people have joined a Facebook group, “NatWest Closed Down Our Account”, to vent their anger and seek advice on how to get their money back, while more than 10,000 have joined the “Monzo stole our money” Facebook group.
The administrators of both Facebook pages say they have seen an alarming spike in the number of people signing up to the groups, with more than 1,000 people registering to join the Monzo Facebook page in the past 30 days. The NatWest Facebook page had just five members 18 months ago.
Martyn James, from the independent online complaints resolution service Resolver, told i: “This is a massive issue and I believe it’s down to the automation of money laundering checks – all our evidence suggests this is going horribly awry.
“People who clearly aren’t doing anything dodgy are having their accounts frozen for no reason, while cuts to customer service mean you can’t get hold of some banks easily – and when you do, you’re told that they can’t help because they are not allowed to discuss why the account is frozen. The blame lies solely with the banks for their systems and staffing levels.”
Mr James added that the financial regulator must take action. Bella Ahosi, who runs the Facebook page “Monzo stole our money” said that “absolutely” the FCA should do more to help people..
The FCA would not comment on whether it intended to do more to tackle the issue of account closures and how long it is taking for people to get their money back but, in a statement sent to i, it said: “We understand the frustration that having an account closed can cause.
“A bank’s decision to provide services is one for them based on their assessment of the customer. Our rules require firms to treat customers fairly and consider the impact of any account closure, particularly where a customer may show signs of being vulnerable. Any firm which freezes an account should ensure customers are not denied access to their money unnecessarily.”
According to data from the Financial Ombudsman, 2,800 complaints were made against NatWest regarding current accounts in the 12 months to the beginning of April, on top of 2,600 complaints made the year before. Almost 1,400 complaints were made against Monzo in 2020.
The Financial Ombudsman was not able to break down how many of those complaints were specifically to do with account closures but a spokesperson for the public body said: “We continue to see complaints from consumers who have had their accounts closed or suspended.”
Kerrie Fowler, a carer from Wales, is one such example. On 11 June she received a text from NatWest that read: “IMPORTANT Following a review of your banking arrangements, we have made the decision that we can no longer offer you banking facilities.”
She told i that it took her a month to regain access to her money. “I was made to feel like a criminal. They made me feel ashamed and all I wanted to do was prove to them I hadn’t done anything wrong, I just wanted my money back. The whole process made me sick with fear, it made me vomit, I couldn’t eat or sleep. The whole thing was embarrassing and degrading.”
Duncan Stevens, chief executive of Gretel, a hub that reconnects consumers with lost and dormant accounts, said: “It is hard to make any argument for this being an acceptable treatment of customers and the distress being caused is plain to see.
“While closing an account is sometimes a necessary action for a bank to take, it must only ever be a last resort and there should be clear and timely communication with the customer at all times.”
NatWest declined to comment on how many have been closed over the past 12 months but a spokesperson for the bank said: “We will never close a customer’s account without good reason.”
Monzo said: “Any decision to close an account follows a rigorous, manual review process and is in line with our responsibilities and requirements as a regulated bank.”
People have had to rely on food banks, handouts from family and friends and high-interest loans to get by when their accounts were unexpectedly frozen.