The big freeze: frozen and locked bank accounts

7 min read
August 30, 2021

In the past year alone, Resolver has received more than 1,000 complaints from people who have had their bank accounts frozen, blocked or even closed – often without warning.

Across more than 1,000 complaints in the year to July 2021 we found that:

    • One in 10 cases detailed that it was taking a significant amount of time to get their account unfrozen – of at least two weeks but some cases were taking months.
    • Customers were having genuine trouble even making contact with their bank, and when they did, they were treated to lengthy waits on the phone.
    • Many reported that their accounts had been frozen for transactions worth less than £500, with some saying that the amounts were below £100.

Frozen account complaints

The ‘big freeze’ has become more prolific in the past two years, and shows no signs of slowing. Frozen, blocked or closed account issues made up a quarter of the complaints Resolver saw to banks specifically concerning account problems in the year to July 2021.

“They have frozen my account with no warning and no reason as to why”

It’s been more commonplace for customers of newer ‘digital’ banks to have problems with frozen accounts. Almost three-quarters of those we analysed were directed to these organisations. But with a quarter aimed at more traditional, established banks, including some of the UK’s best known brands, it’s clear that the issue is widespread across customers of all banks.

You may forgive your bank for acting quickly if transactions valued in the thousands or more suddenly enter or leave your account – assuming you can get your access back quickly of course. But some customers complaining using Resolver said their account was blocked for transactions worth less than £500 – with a handful even below the £100 mark. 

“I was told to state the reason and description of two particular transactions, one for £84 and the other £500”

One told us of a £40 transfer to their account from a friend immediately causing account suspension while another experienced a 13-week freeze at the time of their complaint after three innocent transactions (one of which was £50) from a relative triggered a red flag.

Other examples included:

  • Deposits from benefits or universal credit raising an ‘alarm’ with a bank;
  • Rebate payments from HMRC causing accounts to be  put ‘under review’ and blocked;
  • Salary payments cutting people off from access to their accounts; and
  • Innocent gifts from friends or relatives either to or from customers, including for birthdays or to cover Christmas costs, meaning an instant freeze.

There were also incidents of accounts being repeatedly frozen. 

The long wait for access

One in 10 cases explicitly detailed having accounts frozen for at least two weeks at the time they raised their complaint using Resolver – often after trying repeatedly to sort the issue with their bank directly. But we saw examples of cases that had lasted between three and six months, and a handful beyond that.

An alarming number of consumers that told us this was done ‘without warning’ and ‘for no reason’, including those with their accounts suddenly closed. 

Many of those raising complaints of frozen, blocked or closed accounts experienced not being able to get hold of a person to speak to, waiting hours on a phone line or even having to retry day after day. One customer detailed having to make four calls to their bank’s fraud department, each one with at least a 60 minute wait with one taking up to four and a half hours.

“I spoke to them on a daily basis by calling customer service for more than four to five hours at a time” 

Where contact with a bank was made, more often than not, customers were asked to verify identities and to ‘prove’ the transaction was valid, but it was clear that in some cases this was excessive. A small number  of our complainants told how they were made to feel ‘like a criminal’ and others were clear that their bank assumed it was them conducting ‘fraudulent activity’.  

A significant number of complaints made to digital banks in particular told of accounts being blocked while put ‘under review’. According to the complaints this is a process that can take weeks at least, meaning people were without access to their money for a long time.

“The bank has made me feel like some sort of criminal and all I wanted to do was transfer money out.”

What can you do if your bank freezes your account? 

Here are a few tips if your bank freezes access your money:

Start by asking your bank why your account has been frozen. If you still have access to online banking, go through your recent transactions and highlight anything that might be out of the ordinary. Make sure you note down where they come from. 

When you call the bank, ask to speak to its fraud team as they are more likely to have the power to take a pragmatic look at your account. Ask if a certain transaction has caused the problem and explain why.

If the bank refuses to help then make a formal complaint there and then. Failing that, take the case to the Financial Ombudsman Service (FOS). Unless you get a deadlock letter from your bank, you won’t be able to escalate your case to FOS until eight weeks after you have made the complaint. This applies both if you are simply unhappy with the response or if you’ve had no response at all.

Set up a new bank account as soon as you can. You should still be able to do this despite the account freeze and switching your current account is much easier to do these days. Ask your new bank if you need to set up your regular payments again and make sure your cash is paid into the new account. 

If you are on benefits, then ask if the provider can recall the money in the frozen account and pay it to a new one. You have a legal right to specify where your benefit money goes and in theory the bank should not prevent you from accessing it. 

The automated ‘fraud squad’

We may initially thank our banks for being diligent if they suspect fraud but our data suggest some banks are freezing accounts without good reason and in many cases causing distress for customers. And according to the complaints we have seen here at Resolver, this automatic ‘block’ has occurred because of something entirely innocent, from salary payments to birthday gifts. 

Add to this that what was once a quick call (where you get told exactly why this has happened) to verify your details and get switched ‘back on’ is now more often than not simply automated obstruction. Even if you do manage to get to speak to someone, you’re probably jumping through hoops or worse, being told that there’s nothing that can be done. 

To say that automatic and unnecessary account freezing can needlessly cause panic and genuine detriment to consumers is an understatement, particularly with the added distress of having to try again and again to get the issue sorted, or simply wait while a bank completes an arduous process of over-engineered due diligence for the most innocent of transactions.

“It has put me in a very bad financial situation. I find this completely ridiculous when I’ve complied with everything they’ve asked of me”

From the cases we are seeing, accounts are likely being frozen or blocked because banks have developed more automation into their money laundering procedures. This means that it’s probably computers ‘watching’ for suspicious transactions, particularly as scams have become an unwelcome mainstay. 

This would be perhaps less of a problem if you could sort out the issue quickly. The standard procedure with frozen accounts in the past was to ask the customer a few questions to identify where the disputed payment came from – then the account could be unfrozen immediately. More often than not this was actually done over the phone and you were prompted by your bank that your account was frozen in the first place.

All that’s needed is enough staff with common sense and the power to correct clear errors quickly. We’d also like to see banks empower staff with the ability for them to be transparent about what’s going on with your account. Technology and automation does have its place and there is clear evidence that it improves lives for the better, but in situations such as having your bank account frozen without warning the importance of human interaction cannot be overstated.

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