Frozen out and cashless

It is a nightmare of modern banking.  You want to pay a bill or withdraw cash and you find the bank has frozen all your accounts with no explanation.

Frozen bank accounts are the subject I get more complaints about than any other.  Customers are left helpless unable to pay their regular bills or to get cash. More importantly they cannot find out why their accounts are frozen.

The situation has become worse during the pandemic as bank staff are working from home or even been furloughed so there is no one to answer phones when customers try to find out why they are shut out of their accounts.

Under the Proceeds of Crime Act 2002 banks are obliged to monitor our accounts for fraudulent activity and money laundering.

If customers get through to a bank employee they learn nothing because the banks are under instructions not to tip off fraudsters.  The amount of banking fraud has grown dramatically during the pandemic and the criminals need somewhere to stash their ill-gotten gains.

Banks look for unusual or suspicious activity or large sums being paid into accounts.  This is where an account is frozen so that the money cannot be accessed by criminals.

Unfortunately the algorithms used by banks find it difficult to differentiate between the proceeds of phishing fraud and a customer receiving an inheritance, receiving a matured investment or the proceeds of a property sale or a gift from a relative or the return of a loan.

There could be help on the horizon the Chair of the Treasury Committee, the Rt Hon. Mel Stride MP, has asked the Financial Conduct Authority to look into the claims that banks might be freezing accounts without explanation and what role artificial intelligence has in decisions to close accounts.

Until the banks get their processes sorted out customers will have to make sure they tell them of any unusual activity in advance.  My bank needed a letter from my solicitor when I sold a property and the money was paid into my savings account.  Documentation about loans being repaid, bounce back loans or maturing investments should also be provided.

But probably the wisest action is to always have accounts at more than one bank so that if you have one bank account frozen you can survive until it is sorted out.