Increasing numbers of people are finding themselves fired by their bank. It isn’t clear how many people are getting letters telling them that their custom is no longer wanted, but there are enough reports to suggest it is on the rise.
Telegraph Money found that 20 to 30 people are contacting the Financial Ombudsman Service every month to complain that their bank is closing their accounts. "On this basis, given the small proportion of complainants who raise cases with the FOS in other areas, the number of people booted out by their bank is likely to be in the hundreds every month."
So, why might your bank tell you to take your business elsewhere?
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1. You live abroad
With countries around the world cracking down on money-laundering and tax evasion, banks are now reluctant to have customers who either live abroad or receive regular income from abroad.
One example of this is Barclays, which the Daily Mail found had been sending letters to expat customers in Cyprus, Malta and Greece telling them that unless their account has a minimum balance of £100,000 it will be closed. The bank has said the closures are the result of a “strategic decision to focus on a core set of 70 markets globally.”
2. You’ve made a mistake on an application
Jitters about fraud mean some customers are being dumped because their bank mistakenly thinks they are fraudsters.
The Telegraph reports the case of Alan Barbour who applied for a new current account but didn’t realise he hadn’t updated the electoral roll when he moved house. As a result of the discrepancy in his address history the bank put him on to Cifas, the official fraud register, and refused his account application. Barbour only discovered why he’d been dumped when a friend suggested he check with Cifas.
3. A forgotten financial link on your credit file
When you break up with someone it can be easy to forget about the financial ties you need to break while you haggle over who gets the teaspoons. But, it’s important you take steps to separate yourself financially, otherwise you could get dumped by your bank through no fault of your own.
Say you took out a joint loan with a partner from the bank that holds your current account. When you split your partner keeps the loan and assures you they will repay it. If they don’t you could find that the bank comes after you as a joint borrower on the loan application. In extreme cases this could mean they freeze your other accounts too.
If you don’t break financial links like this it could seriously affect your credit file and lead to problems with your own accounts.
4. You aren’t making the bank money
We all know banks are keen to maximise their profits and this can lead to a lot of unsavoury decisions. One of these can be to dump you. Many people don’t realise how unappealing they are to their bank or building society.
It could be that you have a credit card that you pay off in full each month, or you never run up any fees or charges on your current account and keep little money in it. Both of these mean you make the bank or credit card company very little money.
What to do if you get dumped
If your bank gets in touch to tell you it is closing your accounts and you are unhappy about it you can complain to the Financial Ombudsman.
Codeword: November 16, 2024
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