BANKS are set to make a major change to account closure rules and it’s good news for thousands of households.
Lenders will have to give account holder three months notice before shutting their account under new plans.
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They will also need to provide a full explanation of the closures, according to Sky News.
The plans are said to be formally announced within the next few days.
Banks will be forced to be more clear in their reasoning and up front when making those kinds of decisions.
It comes after Coutts’ closed its account with Nigel Farage, the former UK Independence Party leader.
The closure has led to a closer examination of how the process is played out and what could be adjusted.
Under the proposals customers would still be able to appeal against their lender’s decision to close their account.
The three-month fixed notice period and greater transparency about the bank’s decision would in theory make the appeal process easier.
There would still be a few reasons why banks can shut down accounts, such as criminal activity and national security concerns, according to the reports.
Reportedly, the Financial Conduct Authority (FCA) would need to change its rules to include the changes – but this is expected to take too long.
As it stands, the banks should allow a customer a reasonable amount of time to make alternative banking arrangements before axing their account – although no specific time frame is specified.
Lenders will suspend accounts if they detect any “suspicious activity”.
This might include sending or receiving large amounts of unexplained money.
It covers any transactions that don’t fit with the users typical spending pattern.
If a bank suspects a customer has been victim of a fraud – where large sums of money are sent – it will close the account.
Recent data from Which? found the Financial Ombudsman Service (FOS) received more than 1,380 complaints about current account closures in the year 2022-23, of which a quarter were upheld.
The Sun has previously spoken to several disgruntled customers who have been unexpectedly shut out of their accounts with no warning.
Earlier this year one woman was left in tears when her bank locked her out of her account for weeks after receiving a large amount of money from a family member.
Last September, a single mum-of-four was left unable buy food for her kids after her bank account was suddenly blocked with no explanation.
And a few years ago, a man’s bank account was shut with no warning and he went through “absolute hell” rearranging his Universal Credit payments.
The new measures, if they are enforced, could lead to fewer customers having their accounts shut in this way.
It could also mean that appealing the decision is easier and more clear.
It’s important to note though that nothing has been confirmed as yet, we will keep you updated when this changes.
Meanwhile, another 44 banks are going to be shutting their doors later this year and into 2024.
Plus, Brits could be missing out on cash by not switching savings providers – we explain why.
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