Not upheld: unfair account closure, sanctions compliance complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr S complained that HSBC unfairly closed his personal and credit card accounts after he began working for a UK-regulated but internationally sanctioned bank (M) in January 2025. Although Mr S received his salary under a general OFSI licence and was not a designated sanctioned individual, HSBC reviewed his accounts in July 2025, requested information about his source of wealth, blocked the accounts in November 2025, and closed them in December 2025 citing potential sanctions compliance concerns. Mr S argued the closure was disproportionate and lacked clear explanation, seeking account reopening and £25,000 compensation. The ombudsman found HSBC's review and closure decision reasonable and proportionate given the bank's regulatory obligations and legitimate concerns that Mr S might facilitate transactions breaching international sanctions, even though no specific problematic activity was identified on his account.

The Ombudsman's reasoning

The ombudsman found that HSBC had wide legal and regulatory obligations regarding sanctions compliance that apply on an ongoing basis to existing customers. The bank was entitled to review Mr S's accounts given his links to a designated sanctioned entity. While Mr S is not himself sanctioned, HSBC reasonably assessed that continuing to provide account services might constitute a breach of sanctions regulations, even if a plausible legal argument existed that it might not. HSBC acted within its terms and conditions by providing notice of closure and had legitimate grounds for immediate closure based on the confidential information reviewed. The ombudsman determined that HSBC's decision was proportionate and reasonable given its regulatory responsibilities.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website