On 10 August 2021, the FCA published a letter that it had sent to the Chair of the House of Commons Treasury Committee, Mel Stride MP, regarding the freezing of bank accounts of certain vulnerable customers.
In the letter the FCA explains, among other things, what customer service standards it expects from banks when they move to freeze bank accounts. The FCA makes the following points:
- If a bank considers that it is necessary to freeze an account, the FCA expects any investigation to be carried out in a reasonable time and for customers not to be denied access to their money unnecessarily.
- There are sometimes delays with banks responding to suspicious activity and during this period, accounts may remain frozen. These delays may stem from ongoing issues in banks of all sizes with the meeting of obligations under the Money Laundering Regulations 2017.
- Banks should, where possible, communicate with customers, acknowledging that they may need to take care to avoid alerting individuals in a manner that could undermine further action taken in the future (under the Proceeds of Crime Act 2002). A consequence of this is that it may be difficult to explain to a customer the reason for imposing restrictions on an account.
- Where a bank has decided to withdraw banking services the FCA encourages them to communicate any exit decision with the customer, where possible, including setting out their reasoning clearly. To facilitate this the FCA asked the banking sector to develop some principles. These were published by UK Finance in June 2019.
- If a customer believes their account has been frozen unreasonably they are able to refer the matter to the Financial Ombudsman Service for review.