Partially upheld: Account closure without notice complaint against Teya Solutions Ltd.

Decision detail

Summary

V, a company holding a merchant services account with Teya Solutions Ltd, had their account closed in December 2024 without notice after Teya identified concerns about illegitimate transactions. Teya also held funds for 180 days to cover potential chargebacks. The ombudsman found that while Teya had the right to close the account, they failed to provide reasonable notice as required by industry practice and regulations, as there was no evidence of immediate risk. The ombudsman upheld the complaint in part and ordered £150 compensation for the unfair manner of closure, while accepting the 180-day fund hold as reasonable standard practice.

The Ombudsman's reasoning

While Teya has broad commercial discretion to close accounts and was entitled to do so based on concerns about illegitimate transactions, the closure must be carried out fairly and in line with terms. Industry practice and relevant regulations require notice of intention to close unless there is immediate risk requiring mitigation. Teya failed to demonstrate an immediate risk existed - transactions had been absent since October, and the account was used irregularly. Therefore, reasonable notice should have been provided to allow V to make alternative payment arrangements. The 180-day fund hold was reasonable as standard practice for merchant services accounts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website