Who is required to provide Basic Bank Accounts
Under the Payment Account Regulations 2015, there are nine British banks that are required by law to provide you with a basic bank account, providing you meet certain criteria.
These banks are:
- Barclays,
- Clydesdale and Yorkshire Bank,
- Co-operative Bank,
- HSBC,
- Lloyds Banking Group (including Halifax and Bank of Scotland brands),
- Nationwide,
- Royal Bank of Scotland (including NatWest and Ulster Bank brands),
- Santander; and
- TSB
When does a Bank have to provide you with a Basic Bank Account?
For one of these banks to be required by law to provide you with a bank account, you must:
- Be legally resident within the European Union;
- Not hold another bank account with another institution;
- Not be eligible for any other account with the institution that is not a basic bank account;
- Where you have another account with another bank, you should not be treated as having an account with another credit institution, if you have been told to close that account.
What must a Basic Bank Account allow you to do?
A basic bank account should have several features. These are:
- They should allow you to deposit and withdraw money at their branch;
- They should be free;
- They should allow you online banking facilities;
- They should allow you to withdraw money from an ATM machine;
- They should allow you to set up direct debits, standing orders and to make electronic transfers;
- It should not allow you to run up an overdraft.
When can a Bank refuse to allow you to open a Basic Account?
Banks can refuse to open a basic bank account if it would be unlawful for them to do so, or it would be contrary to:
- The Fraud Act 2006;
- The Money Laundering Act 2007;
- Contrary to Section 40(d) of the Immigration Act 2014; or
- Under Part 4A (f) of the Financial Services and Market Act 2000, the Bank is limited from taking on new business.
A Bank may also refuse to open an account if it believes the conduct of the customer may constitute and offence to one of its staff.
The consumer being Bankrupt is not grounds for refusing to provide someone with a Basic Bank Account.
What happens to Bank Accounts when someone is made Bankrupt?
Being Bankrupt does not prevent you from opening a basic bank account. Equally, the mere fact you have went Bankrupt should not necessarily mean a Bank should close your account, although depending on the type of account, some banks may insist your account is closed and another one is opened.
You also may have to close your account, even if you don’t owe money, if the Bank decide the Account is no longer appropriate for you, because, for example, it had an overdraft facility.
However, this does not mean you cannot have a bank account.
Accessing your funds when you are made Bankrupt
When you have been made Bankrupt, it is normal for a Bank to place an immediate freeze on your account.
This is done by Banks to protect themselves, until such time your Trustee in Bankruptcy notifies them that they have no interest in the funds in your account and they are happy for them to be released to you.
If your Bank Account is frozen, you should contact your Trustee immediately and advise them what has happened. Normally, they will fax through a letter to your bank to advise them they are happy for your funds to be released.
Alternatively, where the Accountant in Bankruptcy is your Trustee in Bankruptcy, they should forward a letter to you when they write to inform you that you have been made Bankrupt
You should take that letter into your Bank. It advises them that they can release your funds to you.
Bank want to close your Account
Where your Bank has agreed to release your funds to you, but asks you to close your account, you should ask them if they will downgrade your account to a Basic Bank Account.
Equally, the nine Banks that must provide basic bank accounts cannot just close your account, if you have a Basic Bank Account already, simply because you have been made Bankrupt, without offering you another Basic Bank Account.
They certainly should not ask you to go to another Bank, simply because you have been made Bankrupt, if they are one of the Bank’s required by law to provide Basic Bank Accounts.
When can a Bank close a Basic Bank Account?
A Bank can only terminate a Basic Bank Account if one of the following conditions are met:
- The consumer has knowingly used the account for illegal purposes;
- There has been no transaction on the account for 24 months or more;
- The consumer provided incorrect information when opening the account and had the correct information been provided, the application would have been refused;
- The consumer is no longer legally resident in the EU;
- The consumer has access to another bank account with the features of a basic account and this was opened after the account with them was opened;
- The Bank considers the conduct of the Consumer constitutes an offence to one of their staff;
How quickly can a Bank close a Basic Bank Account?
A bank can close an account immediately if the consumer has used it for illegal purposes, or provided incorrect information when opening the account; or their conduct constitutes an offence against Bank staff.
If none of these conditions are met the Bank must give two months written notice of their intention to close the account and specify their reasons for doing so.
What can you do if you disagree with your Basic Bank Account being closed?
If you disagree with a Bank’s decision to close your account, you can make a complaint to the Bank.
Equally, if a Bank refuses to allow you to open a Basic Bank Account, you can make a complaint.
When closing your account, your Bank should advise you that you can make a complaint.
They should also advise you that if you are not happy with their proposed resolution of your complaint, you can make a complaint to the Financial Ombudsman Service.
Template Complaint Letter: Account Closed
Dear Sir or Madam
Re: Decision to Close Basic Bank Account – [include Account Number – Sort Code, Name and Address]
I am writing to complain about your decision to close my Basic Bank Account as I have been made Bankrupt/granted a Trust Deed [delete as appropriate].
I disagree with your decision to close my account and not offer me another Basic Bank Account, and believe you have breached your obligations under Regulation 22 of the Payment Account Regulations 2015
Regulation 26 of the Payment Account Regulations 2015 specifies the ground in which you may close a Basic Bank Account, and my insolvency is not one of these grounds.
I can confirm that I have no other bank account that I can use.
I also object that in making your decision to close my account, you should have provided me with two month written notice of your decision, before closing my account, as is required under Regulation 26 (3) of the Payment Account Regulations 2015.
[Provide details as to any hardship the closing of your account caused].
I ask you provide me with a solution that addresses the distress and inconvenience your failure to comply with your duty under the 2015 Regulations has caused me.
If you are unable to do this to my satisfaction, I ask that you provide me with details of how I can take this matter further with the Financial Ombudsman Service.
Yours faithfully
Template complaint letter: refusal to open Account
Dear Sir or Madam
Re: Refusal to open Basic Bank Account – [include Account Number – Sort Code, Name and Address]
I am writing to complain about your decision to refuse to allow me to open a Basic Bank Account as I have been made Bankrupt/granted a Trust Deed [delete as appropriate].
I disagree with your decision and believe you have failed in your duties under Regulation 22 of the Payment Account Regulations 2015 to provide me with a Basic Bank Account.
I meet the eligibility criteria under Regulation 23 of the 2015 Regulations in that I do not have another Bank Account and reside within the EU.
The fact [I am Bankrupt]/ [granted a Trust Deed] is also not a reason under Regulation 25 of the 2015 Regulations for you to refuse me a Basic Bank Account.
Under Regulation 24 of the 2015 Regulations you should have opened a Basic Bank Account for me without delay.
I can confirm that I have no other bank account that I can use.
[Provide details as to any hardship refusing to open an account has caused you].
I ask you provide me with a solution that addresses the distress and inconvenience your failure to comply with your duties under the 2015 Regulations has caused me.
If you are unable to do this to my satisfaction, I ask that you provide me with details of how I can take this matter further with the Financial Ombudsman Service.
Yours faithfully
