RBS advising client they don't want his business

RBS advising client they don't want his business

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Hello all

A ltd company client of ours banks with RBS. Current account and loan account.

He also has a personal current account and a mortgage with them.

He has received letters from the bank saying that they don't want either him or the company to bank with them anymore and all accounts will be closed in 60 days.

Has anyone encountered anything like this or have any speculation as to what may cause a reaction like this from the bank?

Mortgage and loans are up to date. Business is a bar.

The letter states that the decision is final and they will not enter into any discussion regarding this.

Replies (24)

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David Winch
By David Winch
25th Jul 2015 12:43

Banks closing accounts

From what I am hearing (although I do not live in a 'typical' accountant's world) it is not that unusual for a bank to 'sack' a customer in this way.

Whilst it could be simply that the account is (from the bank's point of view) uneconomic to run, it may be that the bank regards the lending as uncomfortably high risk, or the customer operates in a business sector that the bank feels too exposed to, or that the bank has concerns that this customer is somehow abusing the bank's services.

That 'abuse' could mean simply operating in a way to reduce bank charges (such as depositing cash takings into a personal account & then transferring the money to the business account), or repeatedly exceeding borrowing limits, or being late supplying information requested, or the bank may have some concern regarding the legality of the customer's financial activities (i.e. a whiff of money laundering suspicion).

If there is any risk that the bank may have a money laundering concern I would suggest the client change banks as soon as possible (do not wait until the 60 day time limit is drawing near).  The reason is that if the bank's concern increases it may freeze the accounts without warning & then submit a Suspicious Activity Report to the National Crime Agency.

In that event the best you could hope for would be for the accounts to be frozen for a week or two & a freezing for up to six weeks - or perhaps longer - would definitely be on the cards.  Once the accounts are frozen there is precious little the client can do but wait & hope!

So take this as a sign that urgent action is required.

David

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Glenn Martin
By Glenn Martin
25th Jul 2015 12:36

Have you checked all the banking covenants.
Often within the documents they have covenants written within that require the property is revalued every three years. There will be a LTV covenant they will get a valuer to down value the property to create a breach to allow them to get it off the books.
Has the letter come from its recoveries team (they used to be called GRG but changed its name after there dealings were much critised) as they are ruthless and are looked at as another cost centre within the bank so when loans become distressed they then double the interest rate charged.

If you Google the Tomlinson report there is loads of similar cases on line. I think there is some court cases coming up against RBS soon.
The problem you will have is these guys use top city lawyers and the cost of taking them on is massive, so you are better off spending the 60 days refinancing the borrowing away to more mainstream bank if that is possible.
You will find that unless hugely profitable that leisure is not particularly sexy in banking world and you may have to look outside the box to arrange something in the timescales you are taking about.
I know a great guy who is an Ex RBs manager who now represents the clients against the bank in these type of situations I could get him to contact you if you feel he can help, I worked on a project with him last year and he gets results as can get to levels in the bank that is needed to resolve these situations.

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Replying to Glennzy:
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By abak6253
02nd Sep 2016 15:54

I am currently dealing with a matter before the Ombudsman RBS and it would be of great help if I could make contact with the RBS Manager you refer too

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Replying to abak6253:
Glenn Martin
By Glenn Martin
03rd Sep 2016 15:29

I will send you his details in PM.

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By King_Maker
25th Jul 2015 20:28

Perhaps part of the tidying up exercise before RBS is sold off.

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By andygambles
29th Jul 2015 11:22

I was given 60 days notice by HSBC. This was a USD account with HSBC New York. They came out and said it did not fit there "risk profile". At the time they had just received a massive fine from the US Fed for not taking money laundering seriously.

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AS
By AS
29th Jul 2015 11:30

Lloyds TSB

I have a group of companies that operate very high end nightclubs and bars that got the same letter from Lloyds TSB although they allowed more time to get the financing in place with another bank. Natwest/RBS were not interested as they said that they are getting out of that sector.

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By BizzyBizExpert
29th Jul 2015 11:31

Banks and New Brooms

I would agree with what David has said.

From my experience there are several possibilities, Costs v Income from the accounts.

Suspicions of money laundering or even perceived links to some countries. I had client was happily exporting mainly to a country over many years only to get 90 days notice of closure. I had a lot of trouble re-banking his profitable business.

One other factor is a change of manager who has had a loss associated with a particular sector which colours their risk assessment.

Of course RBS and The Royal Bank of Scotland (same group) are restructuring and The Royal Bank of Scotland for instance are selling off accounts to Williams & Glyn.

The problem is in most cases the policy is to refuse to give a reason.

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By waltere
29th Jul 2015 12:05

It happens a lot
It's perhaps not as uncommon as you think - heard something on Radio 4 about it just the other day (You and Yours, possibly). It might be because of any of the reasons already given, or for something else entirely.  Possibly, it's down to erroneous profiling.  I suspect you will never discover the reason for it and your client is not the only innocent person to suffer in this way (assuming he is innocent, of course!): http://www.telegraph.co.uk/finance/personalfinance/savings/10273512/Bank... "Innocent customers are being sacked by their bank as a consequence of overzealous anti-fraud measures, according to the Financial Services Consumer Panel, part of the City regulator." "The financial ombudsman gets more than 200 complaints a year from similarly 'dumped' bank customers. The number of people this happens to is probably far greater, it reckons. The ombudsman is powerless to act in these cases because banks have no obligation to justify their commercial decisions."  

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By James99001
29th Jul 2015 12:25

FATCA

I have actually seen a rise in these situations which I believe are due to FATCA, where there is a possibility that the client is connected to US.  Echoing the above, the banks managing their risk profile.

 

Albeit in one bizarre scenario the bank insisted on closing the current account but not the loan account!

 

I have not seen anything similar so far from Bank of America or Silicon Valley Bank.

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By robertcl
29th Jul 2015 12:30

HSBC have been doing this a lot lately, based on a number of different reasons. The reason they officially state is "money laundering concerns", but take this client as an example:

They operate three different companies doing different kinds of business, and a fourth company as a holding company. It is structured this way because HMRC didn't like them mingling so many different kinds of businesses into a single company and having vastly different SIC codes in the same company. As part of what they deliver to their customers, they have to use services and products from all three companies, and there are therefore quite a bit of intra-group transactions. HSBC referred to this as "money laundering" and promptly closed their accounts.

HSBC also tend to close accounts due to international transactions. The only countries they allow transactions with are the countries where they have a strong retail banking presence as well as most of the EU. Hong Kong, China, Singapore and India are allowed, while they look into (and close) any accounts that transact with Brazil, Mexico, Turkey, Thailand (where HSBC have had strong retail banking but are now withdrawing) as well as Central America and Africa.

They also close accounts for companies that does any sort of business with the gambling industry (such as Betfair or WIlliam Hills) or the banking industry itself, even if it is within the UK.

Unless the business is very simple and easily understandable by the bank staff, banks tend to not quite want business customers anymore, however bank staff are normally not business experts and may not understand what is otherwise a perfectly viable, legal and straight-forward business that doesn't pose any risk to them.

There was also an article recently about a confidential database run by Thomson Reuters that banks subscribe to. It collects information about people and organisations from a vast number of "reputable" sources (including Wikipedia and blogs). If there is anything in the history, even if it was 30 years ago, that hints about something suspicious, it gets flagged. Banks subscribe to the database and use it to make their decisions. If they bank staff are uncertain, they take the better safe than sorry approach and dump the customer.

https://risk.thomsonreuters.com/products/world-check

The non-UK banks (such as Santander) might be easier to work with. I also know that Citi does work with a select few businesses in the UK, although they don't offer the service publicly. I have some hopes for them to begin offering business services for SME's in the UK.

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By Rob Mathews
29th Jul 2015 12:32

De-risking

I agree entirely with what Robert has said.

In this particular example, as the business is a bar, i would expect it receives a high volume of cash, and therefore poses an increased money laundering risk.

It might be overkill, but the regulatory environment for Banks is changing almost daily and, for the foreseeable future at least, de-risking is the name of the game.

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By begood
29th Jul 2015 12:57

Santander Bank

I have received the same from Santander to close my accounts even though I use for business and private.  Have already enquired and they could not entertain.  Have already opened with another bank and am safe.

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By Nazia
30th Jul 2015 10:56

Banks use a blacklisting database called 'world check'

On Radio 4 on Tuesday evening (28th July 15, 8pm) there was a programme called 'HSBC, Muslims and Me'.

It was mainly about how banks were closing accounts held by Muslims because they were so worried about terrorism. It was very informative and highlighted that banks use a database called Worldcheck to check any person's profile. The information is often based on hearsay evidence but a person has no way of challenging it because Worldcheck's terms and conditions do not allow the user to disclose the information contained therein. 

And it doesn't just affect Muslims.

Here is some more information from the BBC:

[HSBC refuses to discuss the bank account closures. But we learned about World-Check, a confidential database owned by the financial information giant Thomson Reuters.

World-Check is used by 49 out of the largest 50 banks in the world to help them judge who to take on, or to retain, as clients.

In the post 9/11 world, banks are required to know their customers and can be held responsible if their clients are involved in financing terror or money-laundering. To avoid this, the banks rely heavily on databases like World-Check.]

http://www.bbc.co.uk/news/magazine-33677946

It might be worth them contacting MP (and highlighting above) and or making a subject access request and specifically mentioning that they want access to the Worldcheck record (the terms and conditions do not comply with the Data protection Act anyway so are unlawful).

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By Tim Robinson
31st Jul 2015 10:32

So can a mortgage be called in early?

If mortgage payments are up to date and there are no breaches of the T&C for that particular mortgage, can a lender just cut short what is a long-term loan?

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By charlespl
04th Aug 2015 15:42

Nat West (part of the RBS group)

We were told by Nat West, our bank for twenty three years, in mid February last year  that they would be closing our accounts on 24 April 2014, two months notice. Although they refused to discuss their discision we believe it was due to our trading connection with Cuba. We transferred our account balances within the time stipulated by them & thought that was the end of it.

However, they continued to charge us for some of the services we had used before they terminated our relationship such as Bankline & Autopay and although we had notified customers & suppliers of our new bank accounts continued to accept some DDs putting our now-empty accounts overdrawn and charged us overdraft interest.  Our relationship manager wouldn't talk to us because as far as he was concerned we were no longer customers.

This situation is still ongoing despite having found someone who will talk to us, they continue to charge us for Autopay a year & a half on. Kafkaesque or what.

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Routemaster image
By tom123
02nd Sep 2016 16:39

We had this when the Co-op bank went a bit wrong. Basically they only wanted tiny businesses like chipshops, and couldn't cope with proper limited company manufacturing types - so they wrote to us quite nicely, and we moved to HSBC. They gave us about a year though.

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By tom123
02nd Sep 2016 16:39

We had this when the Co-op bank went a bit wrong. Basically they only wanted tiny businesses like chipshops, and couldn't cope with proper limited company manufacturing types - so they wrote to us quite nicely, and we moved to HSBC. They gave us about a year though.

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RLI
By lionofludesch
02nd Sep 2016 16:47

Bizarre.

Money Laundering regulations are forcing traders to deal in cash.

Another Unintended Consequence.

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By tom123
02nd Sep 2016 16:51

Not sure how I managed to reply to this zombie thread!! or how it ended up at the top of the lists.

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By tom123
02nd Sep 2016 16:51

Not sure how I managed to reply to this zombie thread!! or how it ended up at the top of the lists.

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Lone Wolf
By Lone_Wolf
25th Jul 2022 13:35

This zombie is hard to kill. Make sure and give it a head shot this time.

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Replying to Lone_Wolf:
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By Paul Crowley
25th Jul 2022 13:59

AccountingWEB versions of Trending and Most read really are Bizarre
But those are articles only

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Replying to Paul Crowley:
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By Leywood
25th Jul 2022 14:39

Whole ‘any answers’ set up is just weird, not particularly user friendly but easily fixable if only someone could be bothered.

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