Barclays is the bank that receives most complaints about small business accounts being closed.
Barclays was responsible for more than half of all the complaints filed with the Financial Ombudsman Service (FOS) between April 2022 to September 2023 about small business banking.
HSBC, Lloyds, NatWest, Santander, and Lloyds all recorded complaints after Barclays. The ombudsman’s compilation sheds some light on which banks receive the most complaints regarding business account closures.
Jean-Martin Louw, from the law firm Collyer Bristow, highlighted that unexpectedly closing a business account can have significant consequences for small companies. These closures disrupt the financial operation, preventing payment of staff salaries and invoices, as well as limiting access to funds.
Businesses with a turnover less than PS6.5 Million can contact the Financial Ombudsman Service if they are having problems with financial service firms. In the 85 cases filed against Barclays from April 2023 to September 2023, 26% of them were accepted, as compared with 9% in the 76 settled cases between 2022 and 2023.
Expert in consumer rights Martyn J. James spoke out about the need to closely monitor banks for fair treatment, especially when it comes to account closures that are not explained.
Closed customer accounts have been the subject of increased scrutiny. Nigel Farage closes his account with Coutts last June. Martin McTague, from the Federation of Small Businesses, highlighted the devastating effect of these closures on smaller businesses. He also brought to light the disparity in power between large firms and small firms.
Banks are not required to give a reason for closing a bank account, but they do have to notify customers two months in advance. Government is looking at ways to tighten regulations. This includes mandating 90 days notice before account closures and demanding explanations, except under exceptional circumstances.
Barclays attributes most account closures to the requirement to update customer information in order to fight financial crime and meet regulatory requirements. Bank reiterated its efforts to reduce account closures, and encouraged customers to keep their information up-to-date. HSBC and Lloyds Bank said that the closure of accounts is in line with their legal and regulatory obligations. NatWest declined to comment.