Upheld: Account closure without notice complaint against Modulr FS Limited
Financial Ombudsman decision DRN-5469727 of 2025-09-29T00:00:00+00:00. Account closure without notice complaint against Modulr FS Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5469727 |
|---|---|
| Decision date | 2025-09-29T00:00:00+00:00 |
| Firm | Modulr FS Limited |
| Product | Other regulated product |
| Claim type | Account closure without notice |
| Outcome | Upheld |
| Remedy | Modulr FS Limited should pay Mr B £100 compensation for trouble and upset caused by the immediate account closure. |
Summary
Mr B opened a HyperJar e-money account in October 2024 to help his daughter with care home expenses. HyperJar closed the account immediately on 6 November 2024 after discovering adverse information about Mr B from 2023, citing fraud risk mitigation obligations. The ombudsman found that while HyperJar could close the account, it should have provided two months' notice as required by its terms and conditions. HyperJar's failure to complete security checks before opening the account due to its non-membership of the relevant organisation did not justify immediate closure. The ombudsman upheld the complaint and ordered £100 compensation for the trouble and upset caused.
The Ombudsman's reasoning
While HyperJar is entitled to close accounts and must comply with regulatory obligations regarding fraud mitigation, it must do so in accordance with its terms and conditions. The terms required two months' notice except in specific circumstances. HyperJar's reliance on adverse historical information from 2023 and lack of membership preventing prior due diligence does not justify immediate closure without notice. HyperJar should have conducted due diligence before opening the account rather than after. The immediate closure caused Mr B inconvenience and upset, particularly as he had already sent the card to his daughter.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Modulr FS Limited, all decisions | 21 | 29% |
| Account closure without notice, all decisions | 11,650 | 19% |
| Other regulated product, all decisions | 51,105 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website