UK Banks Closing Customer Accounts Without Sufficient Reason: A Growing Concern
A consumer group has raised concerns that banks may be closing customers' accounts or marking them for fraud without sufficient reason, resulting in a high number of complaints.
According to data obtained by Which?, the Financial Ombudsman Service (FOS) received over 1,380 complaints about current account closures in the year 2022-23, with a quarter of the complaints being upheld.
The group warns that banks may be silently applying markers against customers' names on the Cifas national fraud database if they suspect fraudulent activity, leaving customers unable to open new accounts or access other financial products without their knowledge.
The warning comes after former UKIP leader Nigel Farage claimed that his bank account with Coutts had been closed due to him being a "politically exposed person" (PEP).
Although the reason for the withdrawal of services was due to Farage falling below the level of wealth required by Coutts, the incident sparked a row and prompted City Minister Andrew Griffith to write to the Financial Conduct Authority (FCA) urging it to prioritize a review into whether people are being denied banking services due to their political views.
Which?
recognizes the importance of banks having the ability to close accounts quickly in the fight against fraud but wants better communication with customers on "what they need to do to challenge decisions, and fairer reviews by banks of these decisions." If a customer believes their bank account has been unfairly closed, they should attempt to make alternative arrangements for their payments to avoid fees or charges, make a complaint to their bank and make a data request to Cifas online to check for a marker, which they can then contest.
If that fails, customers can make a complaint through the FOS.
Customers who successfully make a claim may not have their account reopened, but they could receive compensation and an apology.
A UK Finance spokesperson stated that any decision to close an account is taken after an "extensive review and analysis of the activity on the account" and each case is dealt with on "an individual basis." Banks are required to adhere to legal requirements when assessing criminal activity and must always ensure the customer is treated fairly.
However, with the increasing number of account closures and the high number of compla Cifas, a leading fraud prevention organization in the UK, has come under scrutiny after it emerged that millions of British consumers have been wrongly marked as potential fraudsters by lenders.
The issue was first highlighted by a whistleblower who worked for one of the lenders involved in the scheme.
The whistleblower, who chose to remain anonymous, claimed that lenders were using a "marker" system to flag potential fraud cases.
This system allows lenders to flag an individual's account as suspicious, which can lead to it being frozen or closed.
The problem, according to the whistleblower, is that the evidence used to support these markers is often flimsy or inaccurate.
In response to these allegations, a spokesperson for Cifas said that the organization takes its responsibilities very seriously and that it operates in the best interests of consumers.
The spokesperson added that lenders must follow strict rules and guidance when using markers, and that there are clear processes in place for individuals to make an appeal.
However, critics have pointed out that the marker system is largely unregulated, and that there is no obligation for lenders to investigate or verify the evidence used to support a marker.
This has led to concerns that innocent consumers are being unfairly targeted, and that the marker system is being abused by lenders looking to protect their profits.
The issue has sparked a wider debate about the role of fraud prevention organizations in the UK, and about the need for greater transparency and accountability in the financial sector.
As the scandal continues to unfold, it remains to be seen how Cifas and the lenders involved will respond to the allegations and whether any changes will be made to the marker system.
In light of these developments, it is more important than ever for consumers to be aware of their rights and to be vigilant about any suspicious activity on their accounts.
If you believe that you have been unfairly marked as a potential fraudster, you should contact your lender or financial institution immediately and appeal the decision.
With the right support and guidance, you can fight back against fraud and protect your financial well-being.
The group warns that banks may be silently applying markers against customers' names on the Cifas national fraud database if they suspect fraudulent activity, leaving customers unable to open new accounts or access other financial products without their knowledge.
The warning comes after former UKIP leader Nigel Farage claimed that his bank account with Coutts had been closed due to him being a "politically exposed person" (PEP).
Although the reason for the withdrawal of services was due to Farage falling below the level of wealth required by Coutts, the incident sparked a row and prompted City Minister Andrew Griffith to write to the Financial Conduct Authority (FCA) urging it to prioritize a review into whether people are being denied banking services due to their political views.
Which?
recognizes the importance of banks having the ability to close accounts quickly in the fight against fraud but wants better communication with customers on "what they need to do to challenge decisions, and fairer reviews by banks of these decisions." If a customer believes their bank account has been unfairly closed, they should attempt to make alternative arrangements for their payments to avoid fees or charges, make a complaint to their bank and make a data request to Cifas online to check for a marker, which they can then contest.
If that fails, customers can make a complaint through the FOS.
Customers who successfully make a claim may not have their account reopened, but they could receive compensation and an apology.
A UK Finance spokesperson stated that any decision to close an account is taken after an "extensive review and analysis of the activity on the account" and each case is dealt with on "an individual basis." Banks are required to adhere to legal requirements when assessing criminal activity and must always ensure the customer is treated fairly.
However, with the increasing number of account closures and the high number of compla Cifas, a leading fraud prevention organization in the UK, has come under scrutiny after it emerged that millions of British consumers have been wrongly marked as potential fraudsters by lenders.
The issue was first highlighted by a whistleblower who worked for one of the lenders involved in the scheme.
The whistleblower, who chose to remain anonymous, claimed that lenders were using a "marker" system to flag potential fraud cases.
This system allows lenders to flag an individual's account as suspicious, which can lead to it being frozen or closed.
The problem, according to the whistleblower, is that the evidence used to support these markers is often flimsy or inaccurate.
In response to these allegations, a spokesperson for Cifas said that the organization takes its responsibilities very seriously and that it operates in the best interests of consumers.
The spokesperson added that lenders must follow strict rules and guidance when using markers, and that there are clear processes in place for individuals to make an appeal.
However, critics have pointed out that the marker system is largely unregulated, and that there is no obligation for lenders to investigate or verify the evidence used to support a marker.
This has led to concerns that innocent consumers are being unfairly targeted, and that the marker system is being abused by lenders looking to protect their profits.
The issue has sparked a wider debate about the role of fraud prevention organizations in the UK, and about the need for greater transparency and accountability in the financial sector.
As the scandal continues to unfold, it remains to be seen how Cifas and the lenders involved will respond to the allegations and whether any changes will be made to the marker system.
In light of these developments, it is more important than ever for consumers to be aware of their rights and to be vigilant about any suspicious activity on their accounts.
If you believe that you have been unfairly marked as a potential fraudster, you should contact your lender or financial institution immediately and appeal the decision.
With the right support and guidance, you can fight back against fraud and protect your financial well-being.
