The complaint

Mr C complains that Bank of Scotland plc, trading as Halifax, blocked and then closed his

accounts – and applied a fraud marker against his name.

What happened

Mr C had a current account with Halifax which he opened in September 2019. To help prove

his address, Mr C gave Halifax an energy bill. A few weeks later, Mr C opened a help to buy

ISA. This account would allow Mr C to receive a 25% bonus from the Government, up to a

accounts was final. He was given two months’ notice – and the blocks on his account

remained in place until the account finally closed in February 2020.

Mr C then tried to open a new account with another bank. The application was rejected –

Mr C was told this was because of information on his credit file. Mr C checked this, and

learned that Halifax had filed an entry with the Cifas national fraud database.

Unhappy with all of this, Mr C complained to Halifax. He says that because Halifax closed

his ISA he lost the chance to claim under the Government’s help to buy scheme. He says he

wasn’t able to access his funds until Halifax released the funds to him in March 2020. He’s

also unhappy that the marker prevented him opening new accounts elsewhere.

Halifax looked into this. It agreed that it could have explained things better – in particular,

the Help to Buy ISA. She thought Halifax should also pay Mr C £620 compensation for the

distress and inconvenience the matter caused him,

Halifax agreed with this. Mr C agreed with parts of the decision, but thought we should

award more compensation for the inconvenience Halifax caused – and also suggested

Halifax should pay simple interest on the £1,100.

The other ombudsman is not in a position to issue the final decision. The complaint has

therefore been referred to me to review afresh.

What I’ve decided – and why

of this, I note that the payment was a lot larger than any of the payments into the account up

until that point. We’ve also asked Halifax about the energy bill – it says there were issues

with the barcode of the front of the bill.

With all this in mind, I can’t say Halifax acted unreasonably in their initial decision to block

and review Mr C’s account. I don’t doubt that what happened was stressful – Mr C says he

was overseas when this happened. And I recognise that Mr C doesn’t think there was

anything particularly unusual about this payment into the account, given his business. But

I’m satisfied that Halifax was acting in line with its regulatory and legal requirements at the

point it reviewed the account.

Halifax then carried out its review. It completed this on 20 January 2020. I appreciate this

accounts, it had, in effect, closed the account immediately.

Halifax has explained this is because it believed Mr C had used a fraudulent document when

he applied for the account. But we asked the energy provider about this bill, who said it was

genuine. I recognise that the terms and conditions allowed Halifax to close any account by

giving two months notice – without giving reasons. But in the circumstances, I’m not

persuaded Halifax treated Mr C fairly when it closed the account.

I’ve therefore thought about the impact this all had on Mr C.

First, I see that Mr C had £1,600 in his help to buy ISA – and was transferring £200 a month

into the account. The account provided a government bonus if the savings were used to

purchase a property. Mr C says he used the money to purchase his first home – in March

cost of the property – rather than having to rely on his own funds. With this in mind, I

contacted Halifax to see if they’d pay simple interest from the date Mr C bought the property

– when he’d have received the bonus - until the date Mr C gets it back.

I’ve also thought about the information Halifax registered with the national fraud database. I

acknowledge that Halifax believed that Mr C had provided a fraudulent document. But the

business that had issued the document has said that it’s genuine. I haven’t seen anything to

show that Halifax checked the bill with the utility company. I note Mr C insisted the bill was

genuine and tried to get confirmation of this from the energy company. So I think further

checks would have been reasonable. I’m mindful that the Cifas principles say that members

should only record information where there are reasonable grounds to believe that a

financial crime has been committed and that the evidence is such that the matter could be

that Halifax had closed the account, this added to £620 in total. Mr C says he instead thinks

he should be paid £10,000. I’ve thought about this.

Where I award compensation for distress and inconvenience, this isn’t to punish the

business but to reflect the impact its actions had on the consumer. I see what Halifax did

caused Mr C considerable distress, upset and worry over many months. Mr C has explained

that he was unable to apply for new bank accounts. He says it also caused him anxiety each

time he contacted financial institutions or other professionals. He says he involved solicitors

to try and resolve matters. And I note Halifax only reviewed matters following our

involvement, despite Mr C having tried to provide additional information.

That said, Mr C was able to take steps to mitigate the impact this had on him. He says he

more generally. In this decision, however, I am just looking at the individual circumstances of

Mr C’s complaint. Any concerns Mr C has more generally need to be raised with the

regulator.

Putting things right

As explained above, Bank of Scotland plc should:

 Pay Mr C £1,100 to compensate him for missing out on the government bonus from

the Help to Buy Isa when Halifax closed his accounts.

 Pay simple interest (the rate is 8% simple per year) on that amount from the date

Mr C would have received the bonus until he gets the money back. Based on what

I’ve seen, Mr C bought the property on 5 March 2021. If HMRC requires Bank of

My final decision