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Could your bank account be frozen for no reason?

Emma Lunn
Written By:
Emma Lunn

Hundreds of bank accounts have been frozen or blocked by banks for queries regarding as little as £50, according to complaints website Resolver.

More than 1,000 people contacted Resolver in the past 12 months to complain about their bank account being frozen without warning, shutting them off from their own money for months with little explanation.

Banks can freeze customers’ accounts with no warning if they have concerns about fraud or money laundering. But Resolver’s analysis of the complaints shows that few of these cases involve any transactions that could be considered indicative of money laundering or fraudulent activity.

Some cases involved payments of less than £50. Other people on limited incomes have reported being left without access to vital funds for months with little support from their banks.

Resolver analysed 4,300 complaints made in the past 12 months where people had selected ‘account problems’ as their main area of complaint. Of those, 1,000 complaints were explicitly about bank accounts that have been frozen, blocked, suspended, or closed for no reason.

Many other complaints about customer service issues were also linked to funds being blocked or accounts frozen, with people reporting long waits to get hold of some banks on the phone and staff refusing to speak to them or help on answering.

Resolver says that when this problem first emerged, it was largely confined to some of the newer digital banks, but the issue is becoming more widespread with an increase in the number of complaints about high street banks.

Legally, banks have to install certain anti-fraud procedures and anti-money laundering measures. But people using Resolver have consistently said their accounts were blocked for transactions worth less than £500 – with some falling below the £100 mark.

One person told Resolver of a £40 transfer to their account from a friend immediately causing account suspension while another experienced a 13-week freeze at the time of their complaint after three innocent transactions, (one of which was just £50, from a relative triggered a red flag.

Other examples included deposits from benefits or Universal Credit raising an ‘alarm’ with a bank, rebate payments from HMRC causing accounts to be put ‘under review’, and easily traceable salary payments triggering account freezes. Other cases included cash gifts from friends or relatives resulting in accounts being blocked without warning.

One in 10 cases seen by Resolver involved accounts being frozen for at least two weeks but there were some cases that had lasted between three and six months too, and some even longer.

An alarming number of consumers said their account was frozen or blocked without warning and for no reason, including those with their accounts suddenly closed without the standard 28 days’ notice.

Many of those raising complaints of frozen, blocked or closed accounts reported not being able to get hold of a person to speak to, waiting hours on a phone line, or even having to retry day after day.

Where contact with a bank was made, more often than not, customers were asked to verify identities and to ‘prove’ the transaction was valid.

A number of complainants said they were made to feel ‘like a criminal’ and others were clear that their bank assumed they had conducted fraudulent activity. Others were asked to provide copies of passports and other forms of identification already given when the account was opened.

A significant number of complaints made to digital banks in particular told of accounts being blocked while put ‘under review’. They were told by the business that this is a process that can take weeks, meaning people were without access to their money for a long time.

Nikki Stopford, Resolver’s chief operating officer, said: “Given the endemic levels of fraud over the last two years, few people would begrudge banks being a little more cautious in the measures they introduce to shut down the scammers. Yet in the vast majority of frozen account cases Resolver analysed, it’s clear the people involved are innocent victims of overly sensitive algorithms.

“The irony is it’s incredibly easy to solve this problem. All banks need to do is have well trained and empowered staff on the front line with the power – and common sense – to identify why the account has been frozen, confirm the origins of the transaction and unfreeze the account.
Technology can really improve our lives for the better, but in situations like this, the value of human intervention cannot be overstated.”