Around four years ago, I began to hear reports about bank accounts being frozen for no reason. People were saying that they couldn’t get their hands on their money and the banks were refusing to say why. At first, the problem seemed to be with some of the new online ‘digital banks’.

However, as cases began to spiral out of control, some of the main high street banks began doing the same thing.

Huge numbers of people have reported problems since with many people still locked out of their accounts. In recent weeks, Mirror readers have been reporting an increase in account freezing again. So what’s going on?

Money laundering, the law and what the computer says

When account is frozen, most banks won’t tell you why leaving you in a difficult position. You can’t get clear answers about what’s caused the problem and without them you can’t correct mistakes.

This situation arises when the banks suspect fraud or money laundering on an account. With money laundering, they are not allowed to tell you if an investigation is under way. But realistically, this is not that common. What seems to have happened is some banks have been overly cautious and have extended these rules to any ‘suspicious transactions’ that are out of your usual account profile. This could be a random £500 payment from a family member, for example. There’s no reason why your bank can’t talk to you about a suspicious transaction, but many are interpreting the rules too rigorously.

No one knows definitively why this has become a problem. However, the evidence suggests that it’s because banks have automated their money laundering and anti-fraud checks. Most banks already use automation to spot unusual patterns in bank accounts, but it would seem the computer’s new algorithms have become over sensitive in some cases. I’ve seen people whose accounts have been frozen after a £300 payment which is easily explainable. So it’s clear that things have gone badly awry.

What can you do if it happens to you?

In the past, sorting out an account freeze issue was relatively easy. You called the bank, they asked you a few questions about the suspicious transaction and if you could answer or explain they would unfreeze the account. In fact, the vast majority of these complaints were resolved on the phone, on the day.

However, readers are reporting that banks are simply refusing to talk to them when they call. Here are a few practical tips that you can try if they aren’t playing ball

  • 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 their 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.
  • Set up a new bank account as soon as you can – you should still be able to do this despite the account freeze. Ask the 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 they 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 most important thing is to not panic and make alternative arrangements for your money – you don’t lose the right to make a complaint.

Featured in Mirror – Martyn James

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