Bitcoin Forum

I have been a Lloyds bank customer since around 1978. Last week I received the following letter from my bank:

https://i.imgur.com/XznRlgp.jpg?1

There were similar letters for my other 2 Lloyds bank accounts.  The first account I use as my personal bank account, the second is a joint account with my wife, and the third I use for Bitcoin trading through Bittylicious.  This account has been open about 4 months. Its had quite a bit of money go through it but in fact its the same money going round in circles, and I make a small percentage on what goes through.

A visit to the bank elicited only one more piece of information – they would not tell me why they had done this, under their T&C they are entitled to do this without explanation.

This is quite a serious issue for me – my Bittylicious trades can switch banks just like that but I really would like to keep my own bank account, and my wife is livid and does not understand at all.  I think the mistake I have made here is using a personal account to run a business through, although such a thing is not (at all) illegal, banks apparently do not like it. I imagined they would tell me that the account needed to be upgraded to a business account if it did, but I had no other communication from them.  But I dont know what the problem here is, if its Bitcoin related, or not. I could add that the accounts have always been “well run” overdraft limits have been respected etc.  I feel like I am in a Kafka novel, accused but no-one will tell me what I am accused of, and noway for me to even verify if I did do what I am being accused of, because I don't even know what it is!

I'd like to open a dialog, but at the moment they are not talking. Any advice would be appreciated.  

It's a shitty situation to be in. I doubt they'll have any dialogue with you now that they've made their decision to close the accounts. It's better if you put your energy into opening new ones.

And next time don't have your Bitcoin trading account and personal account with the same bank.

How many times and how long have you been overdrawn?


This alone is a good reason to close your account.

I don't know your situation, but the letter states quite clearly that your account balance is overdrawn; this is usually a perfectly good reason for a bank to close an account and require immediate repayment of the existing debt.

As it seems, this is the reason your bank is closing your accounts; not your use of them for trading.

Just for the avoidance of doubt, the overdrawn balance is within the allowed amount.  The allowed overdraft is higher than this. The other two accounts are in credit. No account has been over any overdraft limit. If this was the problem, they could just change the overdraft limit!!

A bank is permitted to close your account at any time, for any or no reason. It isn't good customer service to do so, but it is their right to choose who they do business with.

They do appear to have treated you fairly by giving you 2 months to find another bank.

I would suggest that you ask them for a specific reason; and in particular which clause of the terms and conditions, they are invoking to close the account. I would recommend that you do that as a formal written complaint to their complaints department, sent by recorded delivery.

If they still won't give you a reason for closing the account, escalate the complaint to the financial ombudsman service. In practice, the ombudsman will only intervene if the bank have treated you unfairly (e.g. closed the account immediately, without giving you time to change payments over, etc.), but you may be able to at least get a reason.

Bear in mind that if the bank is concerned over money laundering e.g. through bittylicious, then they are legally obliged NOT to tell you under any circumstances. If the bank is being evasive and refusing to answer questions, or they seem to be making up false reasons, then this can suggest that they suspect money laundering.

Banks can open or close accounts as they wish. However I think maybe basic account is gotta be provided. As to trading bitcoins, next time write to bank first to see what their policy like :) Or figure out how to restructure the transactions :)

I bank with Lloyds, and trade on LocalBitcoins.

I've not had any serious problems with them. They froze an account once when a fraudster bought BTC from me using a stolen bank account, but that's about it. I used to regularly get calls from the branch when I had large sums going in to my account (which were often hundreds of thousands per month) - I even went into the branch to explain what I was doing so they didn't have to call me any more. They never seemed to have a problem.

I don't know how Bittylicious works, is it a similar way?

Have you considered going to the Financial Services Ombudsman?

I am waiting for the Lloyds complaint procedure to see if that produces anything and then will go to the Financial Ombudsman. My situation sounds very similar to you 5flags. A question: is your Lloyds account abusiness or personal one. So far as I imagine, this is in fact the issue.

Personal.

Even when I had money paid fraudulently into my account, they just made me close it and reopen it with a new account number for "security".

I have not read the law in Britain, but in Canada it is only illegal to mention the reporting to FINTRAC if it is likely to impede an investigation. I reported myself to FINTRAC after unsuccessfully trying to open an account (so that disclosing reports would not hinder an investigation). The manager at the Financial Institution still insisted no report was sent.

It really truly sucks being broke like that, but I've been broke numerous times in life but I don't recall ever having an overdrawn bank account.  While I see nothing morally wrong with it, I do question why you are making a thread with a baiting title.  It hurts any other point you may have when you have overdrawn your account.  There is simply no way for us to make any sort of judgement on the matter.

i would assume you need a business account to run a bitcoin trading operation?  and they wont give anyone a business account for bitcoin in the UK to my knowledge.

See if you can get more information from the bank and come back here if you can and let us know what they say.

Well after several interviews with different bank managers which felt increasingly like Kafkas "The Trial" (You are accused but we will not tell you what you are accused of or what the consequences will be.) I discovered that I had the right to appeal which I did. The rules of the appeal process, I was told (again, nothing in writing!!)  was that I must take printed documents (no computer records allowed) to my account opening branch in Reading, and show these to the manager there. This I did, returning with further details on a second day. She cross checked a couple of random points from my 100 pages or so of data and then sent it of to the "Closures Committee" in Birmingham.  The decision that came back was that they would not right now close my accounts, so I won the appeal. Even so they were not planning on communicating this to me in writing. The accounts will be reviewed in 3 months time when it can all kick off again, without the right for appeal that time.

There is much that I could say here that seems odd to me. For example at one stage a statement was made much along the lines of "Lloyds bank wants to be a domestic bank, not an international bank"  This seems extraordinary to me when surely if Lloyds is to survive it should be a bank that does what its customers want.  They suggested that HSBC might be better for the type of thing I was doing. Now that, although an informal and off the cuff suggestion, is an interesting one, If you believe the advertising of HSBC then they are the bank that would know and adapt to local conditions.

Another strange comment that was made was that the decision (to close my accounts) was being taken for purely commercial reasons. Now I have always paid all my bank charges. Every day I have made an overseas transfer I have paid the amount they asked me to pay (Usually £17.50) I have also suffered terribly because of Lloyds lousy exchange rates on SEPA transfers. In other words they have set the price of the services they offer and I have chosen to use them, how can they then say that they want to close my account for commercial reasons, it seems like that cannot be true.  If they (for example) lost money on overseas transfers then they should charge me more, but that's their problem not mine!!

Its clear that so far as Lloyds is concerned, a business account is what I need, and would have avoided much of this. But most businesses would have been happy to offer advice about which product their customers should be using but Lloyds it seems do not offer this type of advice. 

I will most likely keep my Lloyds accounts for the moment while opening a new account with a more sympathetic bank. I think with at least one potential bank, perhaps HSBC I shall actually tell them that this is going to be part of what I do and see what they say.

Its been an interesting experience, and at times very frightening, because nobody is telling you what the implications are, but it seems that I could and still can just transfer to another bank so perhaps the answer is that the only implication to be drawn from this is that as a Bank Lloyds are still in the 18th century, after all they have not even understood email or mobile phones or customer use of computers in a way that anyone would regard as sane. What chance do they have with crypto currency?  Hell they missed a fantastic opportunity with paypal (as did all uk banks) to "be" paypal.

Turn your back on Bitcoin, pledge your allegiance to fiat, and you will be forgiven.

That stinks man. I hate how these banks can do whatever they want. They act like its a real wonderful thing that they let you do business with them. Sometimes I wish I could survive with all Cash.

What on earth are you talking about? The OP has already made it clear that the overdraft has nothing to do with it (o/d within authorised limit). Banks don't close accounts because they are overdrawn. They make money off them.

This is an excellent example of what happens when industries are heavily regulated. It becomes difficult or impossible for start-ups to enter the field. The industry eventually becomes cartelised between a small number of large companies. Competition disappears and ultimately the consumers suffers.

Indeed. The US has only four parent banking companies and we all saw how that worked out a few years ago. There were over 30 individual banks in the 70's.

So,can you switch to a business account or are you closing that particular account?

I think everyone is reading too much into it.. Having a client with overdrawn accounts, even if it's "within the allowed amounts" is not good business for a bank... Banks make money off your money (balances and loans) and at least on the surface it appears you are a liability to them, BTC aside..

Just to update on my previous posts on this subject:

My account was forcibly closed by Lloyds on Friday - without warning! Although they claimed to have sent me a letter a month ago, which is very convenient. They closed all my accounts, my main current account, and the cash account I used for LocalBitcoins. This was a nightmare scenario because they cancelled my cards and everything.

To offer some context, my earnings are well into 6 figures, and the account is never overdrawn. I'm a little concerned that I have a large mortgage with the Halifax, which is part of the same banking group.

Unlike the OP, I didn't plead for mercy. I demanded £1000 in cash and a bankers draft for the remaining balance. I walked straight out of Lloyds and into HSBC and opened an account there.

Lloyds? Muppets!

If a bank gets any notion of you using bitcoin, they might shut down your account. I have experienced this personally. Open a new one, do it at a smaller branch too. They seem to be easier to work with. And tell your wife it is okay! Just a bank account...don't think this reflects on credit.

Yeah reason I left llyods was this one of my friends had their bank closed for trading Bitcoin so I moved. they are losing a lot of business esepecialy because people who are involved with Bitcoin normally bring in good money for them.

The commercial reason is probably simply that they've got a certain proportion of customers whose transactions result in them getting it in the neck from some regulatory authority and having to waste a load of expensive people's time dealing with it, and they don't always know in advance which people these will be. It's cheaper for them overall just to use a few approximate criteria, applicable by fairly low-skilled people, to weed out anyone who looks like they might end up being one of those people and sacrifice their revenue, in exchange for less expensive trouble.

In theory I suppose they could apply special "flagged as a potential troublemaker rates" and charge you more for the privilege of banking with them to make up for the trouble that you might possibly cause them in the future, but that would end up costing them more to administer than it brought in, and probably wouldn't produce a wonderfully productive customer relationship with you.

Obviously the upshot is that all kinds of people get denied banking services for no good reason, which is one of the reasons we need bitcoin...

Do people get denied from opening a bank? I always thought the bank wants anyone and everyone to further their profit margin.

One thing that can happen is that that the bank that kicks you out can flag your file with the self appointed guardians Equifax and Experian - effectively blocking you from access to banking.

Rubbish. A retail bank earns money by borrowing (deposits) and by lending (overdrafts and loans). An authorised overdraft is simply a type of loan. No bank would ever close an account because the account is overdrawn within permitted limits. In fact depending on the terms of the overdraft it might well be a breach of contract to do so.

Accounts being overdrawn was not an issue in my case, nor I suspect 5flags.

So I approached Metrobank, I was honest about the nature of the business (fool!!) and they spent a week deliberating during which time I understand it went up several tiers of management, before the answer came back, NO. And they said that they did not want to bank any business in a number of classes, and one of those is bitcoin. I asked for another example and he gave the example of the adult industry.

So, I really would like to know which banks are not funny about Bitcoin, preferably without spending a week finding out in each case.

Does anyone have advice as to which Uk bank to use?

I'm taking "Operation: Choke Point" international.  You must turn away from Bitcoin and come back to fiat

I have never had a problem with Nationwide

also take no notice of people commenting about an overdraft
they're probably american
if a cheque bounces accidentally out there it's a case of 'don't taze me bro' and call the cops

luckily in UK people are a little more understanding and just post back requesting payment after returned before small claims, if ever gets to that point

not hating on Americans, just saying their system is very severe to individuals

this will not in any way reflect on your credit rating, it's Lloyd loss for being douches

a few banks may well go under this year, again, so steer well clear of RBS for one
also Barclays are facing big court cases over gold, libor manipulation etc and are scumbags anyway, so avoid like black death

Nationwide are pretty n ice people, no problems ever, no charges etc. they still have that cosy building society feel but with bank high street branches

Have you told them you're doing something bitcoin-related?

More broadly, we could do with a banking version of something like http://bitlegal.net/ telling us which banks are happy with bitcoin-related businesses, which ones actively try to find them and shut them down etc.

I use fidelity investments for checking. Being a brokerage they seem to be a little less restrictive with how I choose to use my money.

Just curious as to how you deposit cash into your Fidelity Investments checking account in the UK? Do you use third party ATMs?

I am in the US and simply use direct deposit. The product I use is the mysmartcash account. I am not sure if there is a UK equivalent.

Just switch to another bank, it was a matter of time when theese thing were going to start happening.
large banks scared of bitcoin, well, i call that a win in any case.

There is the List of Bitcoin Hostile (and friendly) Banks (https://bitcointalk.org/index.php?topic=264679.0)

unfortunately, it looks neglected and has no UK entries yet.

seek exorcism

It appears that your account is overdrawn. Overdrafts are generally considered as being unauthorized loans and are very risky for the bank. If your account was often overdrawn then this may be the reason for the account closure.

Did you have an overdraft fee on multiple accounts?  I don't get why multiple accounts were closed.  This type of thing should be illegal.  After a contract is signed to do business their should be no way they can back out of the deal without good reason.  This is a crazy system we have in place and all signs point to things getting much worse.  Soon there will be no option to move to another bank..  Very sorry for the inconvenience they've caused you and your wife.

It is weird that they closed all your accounts.  I think I've had an account closed by the bank in the past when I left it overdrawn for too long.  Not sure if that's what happened to your one account at least.  The comments you've gotten make me think maybe it had something to do with the BTC trading account and they were looking for an excuse to close all your accounts and the overdrawn issue is the excuse they used.

It's a little hard to determine whether it was shut because of using it for Bitcoin or because it was overdrawn. Anyone else want to test out this theory?

ShakyhandsBTCer, Baitty,  If you have something to add, please read at least the first page: the accounts were not overdrawn.
It was certainly bitcoins that upset them.  What drew attention to the account was many small deposits and larger overseas payments.

I have now shut down my Lloyds trading account they dont want it and it seems dangerous to keep it open longer.

I have approached every other High Street bank and asked if I can open a Business account and told them that the business involves Bitcoins. The answer has been in all cases, a rapid, "No You can't".
Even a few unusual banks like Bank of Cyprus and Bank of China, (Yes, they are Uk high street banks as well.)

I believe now that the current situation is that if you run a business that involves bitcoins you cannot be upfront about this with your bank or they will shut you down. They will most likely do that anyway once they discover.

That's bad news. So the only safe way of trading Bitcoin in the UK is through cash and locally? otherwise you risk losing your bank if you use any of the UK banks.

it was likely because he had a large amount if money going into and out of his account compared to his average daily balance

I've had my LLoyds account recently closed, I can assure you it was because of dealings with Bitcoin, I had my account for 15 years, and had used it for a booming ebay account with up to 5k going through it per week, they never complained that I didnt have a business account, although they did suggest I open one, That was back in 2007 wayyyy before Bitcoin.

Recently I got a letter similar to this one but without a number to call, when visting the branch they told me to write a letter, which I will do and I will try to keep you posted on the outcomes. My situation is even more obvious than this one for reasons I can't really go into. I have a blog and trade frequently on Localbitcoins, so I'm not here to troll, just letting you all know that LLoyds are 100% Bitcoin hostile,

Hi,

Any updates from OP or others would be greatly appreciated. This happened to be back in 2013 .. I had 2x lloyds accounts get shut down with 2months to leave. I'd been trading quite large volumes via lbc and bittlylicious. What was most upsetting is that as soon as I got notifies I applied online to get accounts elsewhere and was denied. Im not sure if it was related but I assume so. Worth noting is that my credit score was and still is perfect. Thankfully I have another account elsewhere but have been nervous about buying bitcoin from exchanges.

Can anyone provide an update as to whether they had any further issues either with original or other banks?

Thanks:)