Upheld: Account closure without notice complaint against First Rate Exchange Services Ltd
Financial Ombudsman decision DRN-5526859 of 2025-07-14T00:00:00+00:00. Account closure without notice complaint against First Rate Exchange Services Ltd. Outcome: Upheld.
Decision detail
| Reference | DRN-5526859 |
|---|---|
| Decision date | 2025-07-14T00:00:00+00:00 |
| Firm | First Rate Exchange Services Ltd |
| Product | Other regulated product |
| Claim type | Account closure without notice |
| Outcome | Upheld |
| Remedy | Release remaining funds held on Miss G's account; pay 8% simple interest from 23 October 2024 until funds are released; pay £100 compensation for distress and inconvenience caused. Account remains blocked. |
Summary
Miss G's account with First Rate Exchange Services was blocked on 23 October 2024 due to suspected misuse, and while £618.63 was released, the remaining balance was withheld pending a letter from a third-party source bank confirming a dispute was raised in error. Miss G could not obtain this letter, and First Rate Exchange Services refused to uphold her complaint or provide sufficient information to the FOS to justify the withholding. The ombudsman upheld the complaint, finding the firm acted unfairly by withholding funds without adequate justification and ordering release of the funds with interest and £100 compensation for distress caused.
The Ombudsman's reasoning
While businesses can generally block accounts for suspected breaches of terms and conditions, First Rate Exchange Services failed to provide sufficient detail or supporting information to justify withholding Miss G's funds. The firm's repeated failure to respond to FOS requests for information meant it was impossible to verify the fairness of its decision. Under DISP 3.5.9R(3), the ombudsman can account for a party's refusal to provide information when reaching a decision. Without evidence supporting the withholding, the ombudsman concluded the firm acted unfairly and the distress caused was avoidable.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Rate Exchange Services Ltd, all decisions | 30 | 35% |
| Account closure without notice, all decisions | 11,913 | 18% |
| Other regulated product, all decisions | 51,462 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website