Upheld: Account closure without notice complaint against First Rate Exchange Services Ltd
Financial Ombudsman decision DRN-5777302 of 2025-09-08T00:00:00+00:00. Account closure without notice complaint against First Rate Exchange Services Ltd. Outcome: Upheld.
Decision detail
| Reference | DRN-5777302 |
|---|---|
| Decision date | 2025-09-08T00:00:00+00:00 |
| Firm | First Rate Exchange Services Ltd |
| Product | Other regulated product |
| Claim type | Account closure without notice |
| Outcome | Upheld |
| Remedy | First Rate Exchange Services Ltd must: (1) release the remaining funds held on Mr B's account; (2) pay 8% simple interest from 17 April 2025 until funds are released; (3) pay £100 compensation for distress and inconvenience caused. The account block itself was not required to be lifted as the block decision may have been valid, but the withholding of funds was not justified. |
Summary
Mr B's travel money card was blocked on 17 April 2025 by First Rate Exchange Services Ltd, which discovered he held six cards instead of the permitted three and had negative balances on some accounts. First Rate Exchange Services withheld his remaining funds, citing the negative balance as justification. Mr B complained that the negative balance resulted from fraudulent transactions on a card he had reported lost. First Rate Exchange Services failed to provide adequate information or evidence to support its actions despite multiple requests from the FOS investigator and ombudsman. The ombudsman upheld the complaint, finding the firm had not acted fairly in withholding the funds and ordered release of funds plus interest and £100 compensation.
The Ombudsman's reasoning
Businesses may block accounts if they have a genuine reason and terms permit it, but they must act fairly and provide sufficient justification. First Rate Exchange Services failed to provide adequate information or evidence to support its decision to withhold funds despite multiple requests from the FOS. Without evidence demonstrating fair conduct, the ombudsman could not reasonably conclude the firm acted fairly. The firm's refusal to provide information was treated as an evidential matter under DISP 3.5.9R(3), weighing against the firm.
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