“My bank account has been mysteriously frozen – and no one will tell me why”

Consumer rights expert Martyn James explains what you need to know if your bank account has been mysteriously frozen or closed, what to do about it, and what happens to your money

About four years ago I heard reports of bank accounts frozen for no reason.

People said they couldn’t get their hands on their money, and the banks refused to explain why.

At first, the problem seemed to be with some of the new online digital banks.

However, as cases spiraled out of control, some of the main banks began doing the same.

A large number of people have since reported issues with many people still locked out of their accounts.

In the past few weeks, Mirror readers have reported a renewed increase in account bans. So what’s up?

Money laundering, the law and what the computer says

If the account is blocked, most banks won’t tell you why, which puts you in a difficult position.

You cannot get clear answers as to the cause of the problem, and without them you cannot correct errors.

This situation arises when banks suspect fraud or money laundering on an account.

Has your bank account been frozen or closed unexpectedly? Let us know: mirror.money.saving@mirror.co.uk

In the case of money laundering, they are not allowed to tell you if an investigation is ongoing. But realistically, that’s not so common.

What seems to have happened is that some banks have been overly cautious and have extended these rules to any “suspicious transactions” that fall outside of your usual account profile.

For example, this could be a random payment of £500 from a family member.

There’s no reason your bank can’t talk to you about a suspicious transaction, but many are too harsh on the rules.

No one knows for sure why this has become a problem.

However, the evidence suggests that banks have automated their anti-money laundering and anti-fraud checks.

Most banks already use automation to spot unusual patterns in bank accounts, but it seems that the computer’s new algorithms have become overly sensitive in some cases.

I’ve seen people have their accounts frozen after paying £300, which is easy to explain. So it’s clear things went wrong.

What can you do if it happens to you?

In the past, it was relatively easy to fix an account freezing issue.

You called the bank, they asked you a few questions about the suspicious transaction and if you could answer or explain, they would unblock the account.

In fact, the vast majority of these complaints were resolved over the phone the same day.

However, readers report that banks simply refuse to speak to them when they call.

Here are a few handy tips to try when you’re not playing

• If you still have access to online banking, go through your recent transactions and mark anything that might be unusual. Be sure to note where they are from.
• If you call the bank, ask to speak to their fraud team as they have more of an opportunity to take a hands-on look at your account. Ask if a specific transaction caused the problem and explain why.
• If the bank refuses to help, then complain there and then make a formal complaint. Otherwise contact the Financial Ombudsman.
• Set up a new bank account as soon as possible – you should still be able to do this despite the account being blocked. Ask the new bank if you need to set up your regular payments again and make sure your money is deposited into the new account.
• If you receive benefits, ask if they can recall the money in the suspended account and transfer it to a new account. You have a legal right to control where your benefit money goes, and in theory the bank shouldn’t stop you accessing it

The most important thing is not to panic and find alternative arrangements for your money – you do not lose the right to lodge a complaint.

What if your account has been closed?

Trying to find out why your account was closed is almost impossible with some banks. But usually the reasons are:

• Suspicious transactions outside the normal range on the account.
• Lack of use
• suspected fraud
• Personality conflicts (you were repeatedly rude to staff)
• Support for illegal activities, terrorism, etc.
• reputational risk

And supposedly:

• You don’t make them any money
• Automated systems make mistakes
• people who make mistakes

While the bank cannot be forced to tell you why they closed your account, you can complain if you think they made a mistake.

This is important as the process of filing the complaint or going to the Financial Ombudsman may give you the answer you need.

Your bank won’t tell you that they think you’re up to something shady.

However, ask them the question: has my account been closed because of these transactions because I can explain them?

Explain these transactions, chances are they either acknowledge the problem of saying no, in which case you can remove this transaction from the list.

You can also ask to speak to the bank’s actual fraud investigation team, who are more likely to take a realistic approach to things in the system that caused your account to be frozen or closed.

Your bank won’t tell you that they think you’re up to something shady, but chances are they’ll either acknowledge the problem of saying no, in which case you can cross that one off the list.

Mistakes happen and sometimes you get mistaken for someone with a similar name who is on a list of scammers somewhere.

Or someone just typed the wrong thing into the computer.

If you proceed with your complaint, reiterate that you are concerned about any inaccurate information that may be on file that could affect your creditworthiness or reputation and request that it be corrected.

Always take the complaint to the final stage of the bank’s complaints process and get a written reply.

The higher you climb, the more likely someone will take a pragmatic view of the situation.

The Ombudsman cannot tell you confidentially what the bank has told him, but he can check that information to see if it appears fair or correct.

For the last 20 years I have dealt with people who were deeply distressed by an account closure.

This paranoia of never knowing if there is a “black mark” behind your name can have a profound effect on you and your relationship with all other financial services providers.

But in the vast majority of cases, the reason for the closure was a bug or something very small.

And there’s no reason why you shouldn’t tell people that.

Even if the only answer is: We don’t want you anymore because you don’t earn us any money.

It is high time that this veil of secrecy was lifted once and for all – and, if necessary, incorporated into the regulations.