Getting too tough on fraud?

We wrote a blog recently about how financial fraud is on the rise. While we salute those organisations doing everything they can to prevent fraudulent transactions taking place, we’ve been hearing from more and more clients about how things have now gone too far - have we actually got too tough on fraud?

Accounts being closed, funds frozen and blocked transactions are just a few things experienced by bank users recently as they try to crack down on crime. It seems our clients aren’t the only ones to experience this anti-fraud frenzy. 

The Sunday Times reported how regulators are putting more pressure on financial institutions to be robust, concerned that criminals are taking advantage of weaknesses in banking systems. Monitoring transactions as well as adding more layers of security for larger transactions and payments to cryptocurrency sites.

Whilst these sound like simple, straightforward ways to keep our money safe from fraudsters, it’s actually making it extremely difficult for customers to access their own cash. Some 5,500 NatWest customers who had said they had been locked out of their accounts without explanation. Monzo too have been freezing accounts - with one customer telling the Sunday Times she was left without a penny after Monzo left her without access to more than £50,000 of her own money.

She said she’d just sold her house, so had a large sum deposited in her account - but this was never confirmed, and her accounts were then closed. It took the customer more than a month to get all her money back and, unable to work due to the Covid-19 pandemic and with two children to feed, she felt as though she was stranded. Monzo offered just £50 compensation for the inconvenience.

It seems she wasn’t the only one, but Monzo, Pockit, Revolut and Monese are one of the worst culprits, and there has been a rise in customers complaining of sudden account closures according to review site Smart Money People. One Revolut customer said she’d been waiting 5 weeks to get her money back after spending just £450 in one day - and without warning.

Unfortunately, whilst it is frustrating, it is not illegal. Banks are allowed to implement any security restrictions, freeze and even close accounts without warning - and they don’t even need to give a reason. This is because if they believe it is due to money laundering, it could hinder a police investigation if they were to report it.

As the numbers of things like cryptocurrency continue to rise, there is certainly an urgency to protect cash - but not to the detriment of the thousands of customers who are left without access to their accounts.

These issues can be even more complicated if you are trying to help someone who has lost mental capacity to manage their finances and in particular if there is no registered Lasting Power of Attorney or Court appointed Deputy.

If you have been affected by this and would like any legal advice, contact Downs Solicitors to see how we can help.


Liz Dalgetty

Liz Dalgetty

Consultant Solicitor & Notary Public

Tel: +44 (0) 1306 502251

Office: Dorking Office