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What to do if your bank closes your business account
Learn what to do if your bank decides to close your business bank account.
Discovering that your business bank account has been closed - a process often referred to as debanking - can be stressful and disruptive. If this happens to you, it’s important to act quickly to keep your finances on track, protect cash flow and ensure your business continues running smoothly.
This guide outlines what to do if your bank closes your account and how to safeguard your business against sudden banking interruption.
At a glance
A bank should give you at least 90 days' notice before closing a business account
Common reasons for closure include inactivity, suspicious or criminal activity, regulatory issues or a breach of the terms and conditions
If your bank closes your business account, you can complain first to the bank and then to the Financial Ombudsman Service if you reman unhappy
If your bank won’t reopen your account, ask to have the funds transferred to another account
Find the right bank account for your business
Can a bank close my business account without warning?
A bank can close your business account at any time and without explanation, although it should still give you notice beforehand.
Under new rules, your bank should give you at least 90 days’ notice before closing a business bank account or terminating a payment service. Banks must also provide a clear explanation for the closure.
Bear in mind that some business bank accounts aren’t covered by regulation, and if a bank suspects money laundering or other legal activities, it may close your account without warning or explanation.
Why would a bank close my business account?
There are several reasons why a bank might close your business account. Common reasons include:
Inactivity
If you haven’t used your business account for a while, your bank may decide to close it to reduce administrative costs or comply with regulatory requirements around dormant accounts.
Suspicious activity and financial crime
Banks have a legal obligation to ensure their services aren’t being used for financial crimes such as money laundering or financing terrorism.
If your bank spots repeated large deposits or withdrawals that don’t match your usual business activity, or transfers to or from high-risk countries, it may close or freeze your account.
Regulatory or compliance issues
If you fail to send updated identity documents, proof of address or other information about your business, your bank won’t be able to follow strict Know Your Customer (KYC) rules and may be forced to close your account.
Your bank may request these documents from time to time as financial guidelines change, so be sure to supply them quickly.
Breach of terms and conditions
If you use a business account for personal transactions or frequently exceed your overdraft limit or fail to pay bank fees, your bank may decide enough is enough and close your account.
Providing false or misleading information
Banks rely on accurate information when they open and manage business accounts. If you give incorrect details about your business, its owners, income, trading activity or source of funds, your bank may close your account.
This can happen even if the mistake wasn’t deliberate, so make sure your application and account details stay up to date.
Bank policy changes
Sometimes a bank closes business accounts because its own rules change internally. It may stop serving certain sectors, account types, company structures or customers with links to specific countries.
This doesn’t always mean you’ve done anything wrong. It can simply mean your business no longer fits the bank’s criteria.
What should I do if my bank closes my business account?
If your bank closes your business account, follow these three steps to try to resolve the issue:
1. Contact your bank
As a first step, speak to your bank to try to find out why your account has been closed. If you think your bank closed your account unfairly or failed to give you adequate notice, ask whether it can reopen your account.
If it refuses, ask how you can get your money back. You may need to provide the details of another company account or your personal account so the bank can transfer your money.
2. Make a formal complaint
If you're not happy with the outcome, you can make a formal complaint to your bank. It must respond within 15 days if your complaint relates to payment issues linked to the closure of your account or not being given enough notice, or within eight weeks for other types of complaint.
3. Take your complaint to the ombudsman
If, after receiving your bank’s final response, you are still not satisfied with the outcome, you can complain to the Financial Ombudsman Service (FOS). This is an impartial and free dispute resolution service for consumers.
Some of the types of complaints it sees that relate to account closures include factual and administrative mistakes, being given conflicting information, and not receiving enough notice.
Just be aware this can be a lengthy process and you may not get the outcome you want. In such an instance, you will need to look for a business bank account elsewhere. However, it’s unlikely you’ll be able to do this if your bank closed the account due to fraudulent or criminal activity.
On the other hand, if the FOS rules in your favour, you may receive compensation from your bank and it may have to reopen your account.
FAQs
How do I get money out of a closed bank account?
If your bank closes your business account and refuses to reopen it, ask how you can access your funds. You usually need to provide alternative payment details, such as another company account or a personal bank account of one of the business’s owners
Can you reopen a closed business bank account?
If you believe your bank unfairly closed your business account, it may agree to reopen it after reviewing your complaint. If not, the Financial Ombudsman Service (FOS) can investigate and, in some cases, require the bank to reinstate the account or compensate you.
What happens if my bank closes my business account?
Put simply, a closed business bank account is bad for business. As well as making it difficult for you to pay suppliers and staff, you won’t receive any sales income, which could make it impossible to operate. You may also incur late payment charges, which could affect your business credit score.
How can I prevent my business bank account from being closed?
To reduce the chances of your bank closing your account, keep your account active by making regular transactions, provide accurate documents when requested, familiarise yourself with the bank’s terms and conditions, and stick to them. You should also inform your bank of any significant changes to your company.
Should I open more than one business bank account?
Opening more than one business bank account can help you avoid disruption if your main account is frozen or closed.
A second account gives you another way to continue day-to-day banking. It can also help if one provider has a technical issue or delays a payment.
However, don’t open extra accounts unless you can manage them properly. Keep your records clear, check each account regularly and make sure you understand the terms and any fees.
Can I still access my bank statements after the account closes?
You may still be able to access your bank statements after your business account closes, but it depends on the provider. Some banks let you download statements through online banking for a limited time. Others may send final statements by post or ask you to request copies.
Download your statements as soon as you know the account is closing. You may need them for your tax return or future account applications.
What happens to direct debits, standing orders and card payments?
When your business bank account closes, your direct debits and standing orders usually stop. This means supplier payments, subscriptions, loan repayments and other regular bills may not go through. Card payments can also be affected if card terminal settlements go into the closed account.
Set up a new business account as soon as possible, then update your payment details with suppliers, customers, lenders and card payment processors.