Surge in debanking complaints: FOS’ findings and FCA’s position

03 Feb 2025, 11 mins ago

Debanking complaints are on the rise.

Below, we explore the latest trends, the Financial Conduct Authority’s (FCA’s) ‘warning’ to financial firms and explain how Gherson can assist with challenging bank account closures.

What is the FOS?

The Financial Ombudsman Service (FOS) is an official organisation which settles complaints between small businesses or individuals and financial service firms, such as banks.

It also processes complaints in relation to ‘restricted account closures’ by banks, which relate to financial crime or money laundering concerns and other complaints involving politically exposed persons (PEPs).

What are the latest findings from FOS and the UK’s Treasury Committee?

Last year, the Treasury Committee of the UK Parliament revealed that the number of ‘debanking’ complaints received by FOS increased by 69% since 2020–2021.

This surge included an 81% increase in the number of complaints submitted by businesses.

Since 2020–2021, the number of complaints relating to restricted account closures has almost trebled.

What is the FCA and its position on this surge?

The FCA is the regulator of financial service firms in the UK. In its recent update report and in light of the surge of debanking complaints, the FCA warned financial institutions against denying or terminating bank accounts on unfair and biased grounds or for discriminatory reasons.

The FCA also highlighted the need for financial service firms to comply with the ‘Consumer Duty’, implemented in July 2023, to deliver good outcomes for retail customers. These include ensuring that decisions on account access and closures are based on reasonable and properly considered grounds.

The FCA also reiterated its expectation for financial service firms to act proportionately to the risks they identify regarding financial crime, ensuring that they do not apply a blanket risk management policy to their clients.

Adverse information on compliance databases

We continue responding to enquiries from individuals who feel that incorrect and/or inaccurate data about them is stored in compliance databases and it is having an adverse effect on their relationship with financial institutions, resulting in bank account closures, difficulties opening a bank account and other issues.

To help those who have faced adversity in this regard, we have written a series of blogs on a basic overview of the main functions of compliance databases, such as World-Check, and the actions one can take to correct information about themselves on such databases.

Bank account closures or “debanking”

We have previously written about how other issues individuals may face, including account closures, are not limited to political figures in the UK, and affect many thousands of lawful individual and business customers every year.  These cases have exposed the difficult balance many financial institutions and their individual and business customers must navigate to gain and maintain access to basic banking services. 

To assist those whose accounts have been closed, Gherson’s financial crime, investigations and regulatory team have written the following blogs:

Could a CIFAS marker be affecting my ability to obtain financial services?

We are increasingly approached by individuals who have been adversely affected by a CIFAS marker and want advice on how to remove it. 

In some scenarios, a CIFAS marker can be issued wrongly against an individual, having a hugely detrimental effect on their life due to its wide-ranging, complex and adverse consequences.

In a previous blog we have examined what a CIFAS marker is and how to try and get it removed.

In a subsequent blog, we have examined the next steps if the bank and CIFAS refused the complaint. 

Updated: 3 February 2025

How Gherson can assist

Gherson’s regulatory, white collar and investigations team are highly experienced in providing assistance in situations where a bank freezes or closes your account. This includes assisting clients with submitting a request under data protection legislation, otherwise known as a Data Subject Access Request, to ascertain what information banks and other financial institutions may be holding on them and how these institutions make decisions, and then analysing the response and helping with any appropriate challenge.

If you have any questions arising from this blog, please do not hesitate to contact us for advice; send us an email at enquiries@gherson.co.uk or, alternatively, follow us on  XFacebookInstagram or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice.  Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position.  Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog.  For formal advice on the current law please do not hesitate to contact Gherson.  Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2025