Partially upheld: Account closure without notice complaint against Lloyds Bank PLC

Decision detail

Summary

P Ltd's bank account with Lloyds was blocked on 5 November 2025 in error, with the block remaining unnoticed for five days. When discovered, Lloyds provided no initial explanation and later falsely claimed there was a dispute between directors, requiring a letter to resolve. The block lasted seven days and caused significant operational disruption, forcing Mr H to borrow money and resulting in reputational damage when clients were wrongly chased for payments. Lloyds' response to the complaint was delayed by over eight weeks despite multiple follow-ups. The ombudsman upheld the complaint in part, finding the account blocking was an error but determining that £500 compensation for inconvenience and reputational damage was fair and proportionate, rejecting the complainant's request for £1,850.

The Ombudsman's reasoning

The ombudsman acknowledged that Lloyds made a clear error in blocking the account and providing false reasons. While the complainant is a business and therefore cannot suffer distress, the ombudsman considered the practical impact including operational disruption, reputational damage, and the effort required to resolve the issue. The ombudsman found that £500 compensation was fair and proportionate, consistent with FOS guidance for cases involving considerable or significant inconvenience and disruption with serious short-term impact, even though the block lasted only seven days. The ombudsman rejected the £1,850 claim as lacking clear rationale and supporting evidence of quantifiable losses.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website