Barclays has emerged as the most complained-about bank for small business account closures.
Out of the 413 complaints lodged with the Financial Ombudsman Service between April 2022 and September 2023 regarding small business banking, Barclays accounted for nearly half, with 205 complaints.
Following Barclays, HSBC recorded 67 complaints, Lloyds with 57, NatWest with 53, and Santander with 31. This compilation by the ombudsman sheds light on the top five banks receiving complaints about business account closures.
Jean-Martin Louw from legal firm Collyer Bristow emphasized the significant repercussions of unexpected account closures for small businesses. Such closures can disrupt financial operations, hampering payment of invoices and staff salaries, and impeding access to necessary funds.
The Financial Ombudsman Service offers recourse to businesses with an annual turnover of less than £6.5 million facing difficulties with financial services firms. Of the 85 complaints made against Barclays between April 2023 and September 2023, 26 per cent were upheld, compared to 9 per cent of the 76 resolved cases in 2022-23.
Consumer rights expert Martyn James stressed the importance of close monitoring of banks to ensure fair treatment of customers, particularly in instances of account closures without explanation.
The closure of customer accounts has attracted heightened scrutiny, exemplified by Nigel Farage’s account closure with Coutts last June. Martin McTague from the Federation of Small Businesses highlighted the devastating impact of such closures on small businesses, underscoring the power disparity between small firms and large banks.
While banks are not legally obligated to provide reasons for account closures, they must issue a two-month notice. The government is exploring measures to strengthen regulations, including mandating a 90-day notice period before closure and requiring explanations except in exceptional circumstances.
Barclays attributed most closures to the need for updated customer information to combat financial crime and comply with regulatory requirements. The bank reiterated efforts to minimize account closures and urged customers to maintain updated information. HSBC, Lloyds Bank, and Santander stated that account closures align with legal and regulatory obligations, while NatWest was unavailable for comment.
Read more:
Barclays Leads Complaints List for Small Business Account Closures