This is Money - Complaints lead to account closure threat

Thousands of people who have complained about unfair bank charges have been threatened - in breaching of industry guidelines - with having their accounts shut down.

A study conducted by This Is Money reveals the extent of bullying tactics being used by some of Britain's largest banks against some of its most vulnerable customers.

More than one in eight people who has tried to reclaim excessive bank fees has been threatened with having their account - and overdraft facilities - closed. Such customers are often in debt and some have incurred huge fees running into hundreds of pounds after going only slightly overdrawn.

The threats by banks run counter to principles laid down in the Banking Code and reinforced by the Financial Ombudsman, which state that banks must treat customers fairly when they are in financial difficulty.

Robert Skinner, chief executive of the Banking Code Standards Board, says: 'Banks are allowed to close down accounts for commercial reasons. But they must also treat fairly any customers who are experiencing financial difficulties.'

He says the situation is improving following Ombudsman rulings in favour of customers and banks are now threatening fewer account closures.

The study by This Is Money also found that about half of those surveyed claim to be owed more than £1,000 in default charges. And about a quarter of those who lodged complaints won back the full amount.

But many banks still appear to be stalling on making payments to customers who win their claim. Only 17 pc of claimants received their money within a month of winning back their charges, and another 17 pc had to wait more than a year.

Last week, research by investment bank Credit Suisse found that fee reclaiming has already cost banks £200m this year. It said that the banks had been hit hard by the backlash against excessive charges, predicting it would cost around 1% of the major groups' profits this year.

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