Not upheld: account restrictions and fund withholding; lack of transparency regarding reasons for restrictions complaint against HSBC UK Bank Plc

Decision detail

Summary

Mrs and Mr P complained that HSBC froze their joint accounts without explanation, preventing them from accessing funds, paying their mortgage and credit card bills, or covering essential living costs. HSBC refused to provide a timescale for the review or reasons for the restrictions, citing regulatory obligations. The ombudsman found that HSBC acted in line with its regulatory obligations and account terms, and was not obliged to disclose reasons for restrictions to customers. Although acknowledging the significant distress and financial hardship caused to Mrs and Mr P, the ombudsman did not uphold the complaint as HSBC had not acted unfairly. The ombudsman noted that separate complaints about account closure and delay in returning funds would need to be addressed by HSBC first.

The Ombudsman's reasoning

The ombudsman found that banks are strictly regulated and must carry out ongoing monitoring of customer relationships, which sometimes requires account restrictions. HSBC provided information showing it acted in line with account terms and regulatory obligations. The ombudsman determined that HSBC was under no obligation to disclose reasons for restrictions to customers, though it must provide information to the ombudsman. Some information was kept confidential due to security and commercial sensitivity. While acknowledging the difficult position Mrs and Mr P were placed in, the ombudsman found no basis to award compensation as HSBC did not do anything wrong in reviewing and restricting the accounts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website