HSBC froze my business account after a customer error – why is it still locked?
I am a doctor who runs a busy medical practice with the NHS and in private.
Our private clinic account was suspended when one of our patients made an incorrect payment.
We have submitted all documents twice to HSBC showing this, including once in branch and online.
Our account is still suspended and we are unable to pay our nurses and staff, or obtain essential drugs / treatments for our patients, some of whom are very ill. What can we do?
Doctor’s office was unable to pay staff or treat patients due to frozen account
Grace Gausden, This is Money, responds: Anyone who saw their bank account frozen would be frustrated, but it’s especially worrying when it means patients are unable to receive life-saving medical treatment as a result.
The reason your clinic’s account was blocked is because one of your patients mistakenly made a payment of Â£ 590 to them after selecting the wrong recipient while trying to pay another bill.
She immediately contacted you to let you know and also emailed HSBC to let you know about the error.
However, although the patient and the clinic sent proof of the wrong transfer to the banking giant, the account was blocked for three weeks before I intervened.
This meant the clinic could not withdraw cash, if necessary, and all standing orders and direct debits were suspended.
As a result, none of the nurses and staff received their salary last month and you add that the clinic could not get the necessary treatment for the patients either.
Obviously, it is essential that this has been rectified so that patients are not without medication.
You’ve been to the local HSBC branch and called the bank regularly, but say you haven’t received any help – or any indication when the account will no longer be suspended.
This is Money contacted HSBC to find out why there was such a delay in releasing the account, especially when proof had been provided to show exactly how the mistake was made.
In response, the bank admitted it took too long to restore the account, but said it has now released it.
A spokesperson for HSBC UK replied: “We are sorry for the inconvenience this has caused, we strive to provide a high level of service to our customers and unfortunately on this occasion we have not responded to our expectations.
âWe have been in contact with [the reader] to apologize and full account access has been restored. ‘
He said the account was properly frozen in accordance with its fraud prevention procedures, but when the matter was reviewed, the reopening of the account was delayed.
He added that when costs are incurred due to the restrictions being put in place, he would consider them on a case-by-case basis.
Delay: HSBC apologized for long wait after bank froze business account
Why are customer accounts frozen?
It has been reported that a large number of customers have had their bank accounts frozen which, of course, can cause major problems.
However, after questions were posed to the Financial Conduct Authority about the large number of frozen accounts, it said it was unaware of a “significant cross-industry issue of banks freezing accounts for no reason.”
He added that it is difficult to say why a bank froze a customer’s account, banks are required to have appropriate systems and controls to counter the risk that customer accounts are used for the purpose of financial crime.
Banks should also have policies and procedures in place to identify and report suspicions of money laundering or terrorist financing.
Essentially, there are a number of reasons why accounts can be frozen, but this is normally due to what the bank considers suspicious activity.
This may be because a large number of payments have been made or even a one-time payment is much higher than the usual receipts.
However, frustratingly, banks are not allowed to tell customers when they are under investigation and therefore cannot explain why.
We are also often encountered by “cannot tell you for security reasons” when submitting bank account closure cases to them.
These regulations are in place to ensure that owners of bank accounts are not “warned” which could, in certain circumstances, lead to more criminal activity.
What can customers do if their account is frozen?
The FCA says any investigation of accounts receivable should be completed within a “reasonable” time frame and that individuals should not be denied access to their funds unnecessarily.
He added that he expects banks to communicate with customers and, in cases where they choose to close an account indefinitely, whenever possible, make it clear why.
Ultimately, however, there is little that customers can do when their account is frozen – and unlikely to get compensation for financial problems while the account is inactive.
One step that clients who believe their account is closed or frozen without a warrant can take is to complain to the financial mediator who will review the case and render a judgment.
It can also be helpful to seek legal advice if you believe you have been treated unfairly.
If your account is closed, it can be extremely difficult to open a new one.
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