HOW BANKS DUMP THEIR CUSTOMERS
Probes a world of scams and scandals
MsV.F. writes: My son paid a cheque into his Lloyds Bank account last year. It was the proceeds of a Scottish Friendly bond that I had been paying into since 2004 and which had matured on his 18th birthday. Shortly after this, Lloyds closed his account and refused to explain why. My son has been unable to open another current account since then, though Lloyds denies it has put a black mark against his name. YET again, a bank decides to ditch a customer. Yet again the customer finds that other banks also shut the door in their face.
Your son still has a savings account elsewhere and he has had to have his salary paid into this. But it is not a current account and cannot be used to pay bills. He was hoping to move to a place of his own, but now he cannot set up a direct debit to pay the rent.
The standard line from all banks when they close an account is that the law against money laundering means they cannot say why. This is because it is illegal to tip off anyone suspected of money laundering as they might be under investigation.
But this same rule gives the banks huge power to do what they like and it makes it almost impossible for the customer to complain successfully. That said, Lloyds has reopened its review of your son’s account and, although the banking of the Scottish Friendly cheque did trigger the problem, it has become clear that this was not the only issue.
Just as your son deposited the cheque, the bank was in the process of changing his account from an under-18s to an adult one. When the bank wrote to warn him that it planned to close his account, your son took it as referring to his under-18s account.
It was only when he tried to pay a cheque into his new adult account some weeks later that he realised it was this that had been closed.
Both you and your son tried to get the branch to reconsider. You offered evidence that the Scottish Friendly cheque was genuine, but branch staff ignored you. Lloyds has paid your son £65 to compensate for this.
The bank insists it has done nothing that would have affected your son’s ability to open an account elsewhere. But a spokesman added: ‘It is clear he had a poor experience in our branch when attempting to resolve this situation.’
Your son should now have received a written apology and a further £100 to make up for the distress and inconvenience. The icing on the cake is that Lloyds is happy to open a new account for him.
But what has happened here is unusual – the bank has changed its mind.
In recent weeks I have reported how Barclays and NatWest have both dumped customers and refused to tell them why.
It is not easy to live without a bank account and anyone whose account is forcibly closed will feel the shadow of suspicion hanging over them for ever.
How long will it be before the Government and the Financial Conduct Authority recognise the unfairness of this and provide an i ndependent appeals procedure, rather than a secret court in which the bank itself provides the evidence and passes judgment?