By: Money Navigator Research Team
Last Reviewed: 16/01/2026
FACT CHECKED
Quick Summary
A business bank account closure complaint rarely turns on whether a bank is “allowed” to close an account in principle.
It usually turns on process and impact: whether the bank followed its own terms, gave reasonable notice, handled funds and payments fairly, avoided bias or discrimination, and put right foreseeable loss caused by errors (including closing earlier than stated or closing the wrong account).
Where things went wrong, realistic outcomes tend to be reimbursement of evidenced financial loss, compensation for inconvenience (and sometimes distress for individuals/sole traders), corrections to knock-on impacts like payment failures or credit-file consequences, and – occasionally – reopening where appropriate.
This article is educational and not financial advice.
What this article means by a “business account closure complaint”
A closure complaint is about how a provider ended (or attempted to end) your banking relationship and what happened as a result – notice, communication, access during the notice period, what happened to funds, and the operational fallout (missed payments, reputational impact, and admin burden).
It’s different from a freeze/restriction where the account remains open but activity is blocked pending checks. If you’re trying to separate these categories operationally, see our guide on the difference between a frozen and a closed business bank account.
Who can take a business closure complaint to the Financial Ombudsman
FOS can consider complaints from eligible small businesses (including self-employed people, partnerships and limited companies) if the business meets the eligibility thresholds and the complaint falls within scope. FOS sets these out in its small business eligibility guidance: who FOS can help for small business complaints.
A key “scope” detail that catches some firms out: for “small businesses” (above micro-enterprise size), FOS can generally only look at complaints about acts or omissions occurring on or after 1 April 2019 (with micro-enterprises able to complain more broadly within the usual time rules). The eligibility page above explains the thresholds and the date condition.
The complaint timeline that matters in closure cases
How long the bank has to respond
For account-closure complaints, the bank generally has 8 weeks to issue a final response. FOS summarises complaint-handling timings for closure complaints in its bank account closures guidance and the underlying FCA complaint-handling framework sits in DISP: FCA Handbook DISP 1.6.
Some connected issues can fall under shorter “payment services” complaint timelines (often 15 days, extendable in limited circumstances). That can matter if the dispute is framed around payment execution/charges rather than the closure decision itself – FOS notes this distinction in the same closure guidance.
The six-month window to escalate to FOS
Once the bank sends its final response, there is usually a 6-month deadline to refer the complaint to FOS. This is reflected in FOS’s own guidance on time limits for businesses and in the FCA’s DISP time-bar rules: FCA Handbook DISP 2.8.
What FOS typically looks at in business account closure disputes
FOS’s closure guidance is unusually specific about the evidence set it expects to see and the questions it tends to ask. In practice, many decisions hinge on a small number of factors.
1) Notice period and access during notice
FOS commonly looks at the contractual notice period, what the provider promised in the closure letter, and whether you had access to the account during the notice period.
FOS also notes that banks “usually” give at least two months’ notice, while recognising exceptions (for example, suspected fraud or abuse) and that business account terms may differ. See: FOS guidance on bank account closures.
Why it matters: “Closed earlier than stated” is often easier to evidence than the underlying reason for closure – and it’s closely tied to foreseeable losses (missed direct debits, late fees, knock-on supplier issues).
2) Whether the bank followed its own policies and procedures
FOS commonly requests internal policies relevant to the closure, contact notes, statements, and the closure notice itself. That means procedural inconsistency (including admin mistakes) can become central – especially where the business can show the provider departed from its published terms or its own documented process.
If your experience looks more like a “process failure” than a policy decision, it can help to understand how onboarding/offboarding checks typically work. Our guides on what documents banks check for business bank accounts and why business bank account applications get delayed explain the verification mechanics that often sit behind closure decisions.
3) A clear explanation and supporting evidence (where it can be given)
FOS says a bank doesn’t have to explain why it closed an account – though it can help. Separately, where restrictions relate to financial-crime controls, firms can be constrained in what they can say.
The practical result is that complaints often focus on what can be tested: notice, accuracy, procedural fairness, and the handling of funds and payments.
Where your situation involves HMRC enforcement (rather than “bank compliance” offboarding), it’s worth separating the two. See our explainer on HMRC enforcement vs bank compliance freezes.
4) Bias, discrimination, and fairness in treatment
FOS flags that closures must not be because of bias or discrimination, and it will consider allegations of discrimination as part of its approach to closure complaints: FOS guidance on bank account closures.
Separately, the Equality Act framework protects people from discrimination in services; background guidance is set out in Equality Act 2010 guidance on GOV.UK.
In practical terms, discrimination arguments tend to turn on evidence: what was said, what was done, comparator treatment (where available), and whether the bank can evidence a reasonable, properly considered decision-making process.
5) Knock-on impacts: payments, credit files, and operational disruption
FOS explicitly notes that closure consequences can include missed payments, reputational harm, and negative information on a credit file. That’s why the documentary trail (failed payment notifications, supplier charges, screenshots of service interruptions, and evidence of admin time) often matters more than “principle” arguments.
If the dispute includes a credit-file dimension (for example, adverse markers triggered by missed payments), see our guide on whether business bank accounts are linked to personal credit files.
Summary table
| Scenario | Outcome | Practical impact |
|---|---|---|
| Closure with promised notice and uninterrupted access | Complaint often turns on whether the bank followed terms and handled funds/payments fairly | Disruption may be hard to remedy unless there’s evidenced loss or procedural error |
| Closure earlier than the stated date | Reimbursement of foreseeable, evidenced losses is a common “put things right” outcome where error is proven | Late fees, missed payments, and supplier penalties become central evidence |
| Wrong account closed / administrative mistake | Provider may be expected to correct the error and address knock-on impacts | Reputational and operational disruption (direct debit resets, customer comms) can be relevant |
| Closure linked to restricted access while checks run | The “closure” complaint may merge with a restriction/freeze complaint | Timelines and evidence often focus on access, communications, and payment handling |
| Remaining balance delayed | Outcomes tend to focus on when funds were released and whether delay caused foreseeable loss | Cashflow impact may be recognised if evidenced and causally linked |
| Credit-file consequences following closure fallout | Outcomes may include correcting incorrect data and addressing foreseeable consequences | Downstream lending/credit effects can persist beyond the closure itself |
Scenario-level / Process-level / Outcome-level framing
| Scenario-level (what happened) | Process-level (what gets tested) | Outcome-level (what is realistically possible) |
|---|---|---|
| Account closed with minimal explanation | Whether terms allow closure; whether notice matched the contract and the letter; whether comms were clear | Bank decision may stand, but poor notice/avoidable errors can still lead to redress |
| Closure notice given, then access removed early | Evidence of access during notice; internal notes; audit trail of restrictions | Reimbursement for foreseeable loss; compensation for inconvenience where appropriate |
| “Reputational risk” cited informally | Whether the provider can evidence reasonable, properly considered grounds and consistent governance | If evidence is thin or inconsistent, outcomes can focus on remedying harm caused by process failings |
| Allegation of discriminatory treatment | Evidence of differential treatment; documented rationale; service-provider conduct | Remedies focus on putting the complainant back in position and addressing avoidable consequences |
| Business claims “distress” from disruption | Legal status of complainant (limited company vs sole trader); how impact is characterised | Compensation may be framed as inconvenience for companies; individuals/sole traders can be treated differently |
| Dispute includes missed payments and supplier fallout | Causation chain and foreseeability; documentary proof of fees/penalties | Redress is more likely where loss is specific, evidenced, and directly linked |
What outcomes are realistic in business account closure complaints
FOS’s own closure guidance is blunt about the most common remedies: reimbursement for financial loss caused by insufficient notice or error, and sometimes “something else” to put matters right (including reopening where appropriate). See: FOS guidance on bank account closures.
Below is how that translates into real-world “what you might actually see” outcomes – without assuming any particular case will be upheld.
1) Reimbursement of direct financial loss (the most common “tangible” outcome)
Where a closure error causes missed payments, late fees, lost interest, or avoidable charges, the realistic remedy is often reimbursement – if the loss is evidenced and reasonably foreseeable in the circumstances. This aligns with FOS’s closure approach in the guidance above.
2) Compensation for inconvenience (and sometimes distress, depending on who is complaining)
FOS explains that limited companies can be compensated for inconvenience, but a company cannot itself experience “distress”; sole traders/partnerships can be treated differently because the business is not a separate legal person in the same way. See: FOS guidance on compensation for distress or inconvenience.
3) Corrective actions: fixing knock-on errors
Where the closure triggered incorrect payment cancellations, incorrect communications, or wrong-account closure, realistic outcomes can include corrections and steps to remedy fallout (for example, clarifying what happened to counterparties where practical, or correcting incorrect data).
FOS publishes case studies that illustrate how “admin mistake + operational disruption” can drive outcomes. For a concrete example, see: FOS case study on a business account closed in error.
4) Reopening an account (possible, but not the default expectation)
FOS notes that reopening can be directed “if appropriate” as part of putting things right, but that does not mean reopening is common in every upheld complaint.
The realistic expectation is that reopening is more likely where the complaint is fundamentally “wrong account / wrong timeline / wrong process”, rather than a bank exercising a contractual right with adequate notice.
5) “Forcing a reason” is not a reliable outcome
Even where explanations are limited, complaints can still succeed on process (notice, accuracy, fairness, and consequences). The practical point is that closure complaints often move forward on what can be tested and evidenced, rather than on compelling a detailed rationale.
Compare Business Bank Accounts
When an account is closed, businesses often discover that “business bank account” is a wide label covering different onboarding checks, payment features, and operational controls.
Those differences can affect resilience (for example, multi-user access, payment approval workflows, cash handling, or how quickly provider checks are triggered).
If you’re comparing account types and providers at a high level (features, fees, eligibility, and common friction points), our hub page summarises the landscape: Business bank accounts.
Frequently Asked Questions
Yes, a bank can close an account without providing a full explanation, and FOS explicitly notes that banks don’t have to explain why they closed an account (even if doing so can be helpful). The more reliable route in disputes is often to focus on notice, accuracy, and whether the bank followed its own terms and procedures.
Where an explanation can be given, FOS says it will often look for a clear explanation and supporting evidence as part of its case assessment. In practice, that means the bank’s ability to evidence its decision-making can still matter – even if the explanation provided to the customer is limited.
FOS says banks “usually” give at least two months’ notice before closing an account, while recognising there are exceptions and that business account terms can differ. The specific notice period that applies to a business account often sits in the account terms.
In a dispute, the notice question is usually factual: what the contract says, what the closure letter promised, and what actually happened in terms of access and timing. That’s why “closed earlier than stated” often becomes a central issue.
This is one of the clearest grounds for complaint because it’s measurable. FOS’s approach indicates that where insufficient notice causes financial loss (missed payments, late fees, etc.), reimbursement can be a realistic remedy if the loss is evidenced and foreseeable.
Even where there is no direct financial loss, early closure can still create operational disruption. In those cases, outcomes often focus on inconvenience and the practical steps needed to put matters right.
FOS indicates reopening can be directed “if appropriate” as part of putting things right. That said, reopening isn’t a guaranteed or universal outcome – particularly where the closure reflects a contractual right exercised with adequate notice and no procedural error.
In practice, reopening tends to look more realistic when the complaint is about a mistake (wrong account, wrong date, incorrect process) rather than a bank’s risk appetite decision supported by evidence and handled fairly.
Foreseeable losses are typically those that naturally follow from an account being closed earlier than promised or without workable access – missed standing orders/direct debits, supplier late fees, or avoidable charges directly linked to closure timing.
Losses that are indirect, speculative, or hard to tie to the closure event usually face higher scrutiny. The practical issue is causation: whether the closure is the clear driver of the cost, and whether the cost can be evidenced.
FOS explains that a limited company can be compensated for inconvenience, but a company itself can’t be “distressed”, so distress awards aren’t framed the same way as they are for individuals. This distinction can materially change how a complaint is presented and what remedy is realistic.
Sole traders and partnerships can be treated differently because the complaint is not necessarily separated from the individual in the same way. FOS explains this in its compensation guidance.
For account closure complaints, the standard timeframe is eight weeks for the firm to provide a final response. If the complaint is characterised as a payment services issue (for example, around execution/charges), shorter timeframes can apply.
FOS sets out these timings in its closure guidance, and the FCA’s DISP rules underpin complaint-handling requirements. The practical implication is that how the complaint is framed can affect which clock applies.
The six-month deadline typically runs from the date the bank sends its final response letter. FOS also notes that certain exceptions can apply (for example, where the final response is not valid, exceptional circumstances, or where the firm consents to waive the time limit).
This deadline is operationally important because a complaint can be “out of time” even if the underlying issue is serious. FOS’s time-limit guidance and the FCA’s DISP time-bar rules set out the structure.
In cases linked to financial crime controls, the customer experience can involve limited explanations and rapid restrictions. Even then, a complaint can still focus on what is testable: whether notice/communications were consistent with the contract and whether avoidable errors created foreseeable loss.
Where the story looks more like a restriction or freeze than a clean closure, the applicable complaint timelines and evidence can differ. The practical point is that “closure” and “restriction” can overlap in a single event chain.
Yes – there are changes coming into force on 28 April 2026 that introduce new termination notice requirements for certain payment services framework contracts entered into on or after that date. The rules include a 90-day notice requirement and requirements about what the termination notice must contain, with specified exceptions.
These rules won’t rewrite the past for earlier contracts, but they can shape what “reasonable notice” and compliant communications look like for future relationships – especially where termination is not tied to a fixed expiry date.
The hidden mechanism in closure disputes is that complaints are rarely “won” on moral arguments about whether a bank should keep banking a business.
They’re more often decided on whether the bank can evidence a reasonable, properly considered decision and show it carried out offboarding in a controlled way – consistent with its terms, with adequate governance, and without avoidable harm.
That’s why the most consequential evidence is often boring: the notice letter, the actual access window, the provider’s internal policy alignment, and the documented chain between closure and specific losses.
When those parts are weak (wrong dates, inconsistent records, avoidable payment failures), outcomes tend to focus on redressing harm – even where the bank’s underlying right to close isn’t seriously contested.
Sources & References
Financial Ombudsman Service guidance on bank account closures
Financial Ombudsman for Small Businesses: who can bring a complaint
Financial Ombudsman Service guidance on time limits for businesses
Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 (PDF)