Walsham le Willows Sports Club, a 134-year-old sports club in Suffolk that hosts cricket and football, has taken Lloyds Bank to the Financial Ombudsman after its accounts were closed. The club had been a customer of the bank for over 70 years when it was asked to provide documentation, including certified identification of key members. This request initiated an eight-month period of extensive information demands, during which the club's questions about the investigation were reportedly ignored. Ultimately, its two accounts were closed.
The debanking incident, which followed a visit to a branch that reportedly refused assistance and two ignored letters to the bank's chairman, caused significant disruption for the volunteer-run charity. Direct debits failed, grants did not arrive, and VAT refunds could not be processed.
After treasurer Ian Campbell lodged a formal complaint, Lloyds Bank eventually opened a new account for the club and deposited £300 in compensation. However, Campbell rejected this as insufficient given the club's difficulties and escalated the case to the Financial Services Ombudsman, which is now investigating.
Campbell described the experience as a "bloody nightmare" and felt the club was treated like a criminal, stating he did not understand what the club had done to warrant such actions. He noted that while some inquiries were reasonable, the bank's approach felt disproportionate.
The issue of debanking has gained public attention, notably in the case involving Nigel Farage and Coutts Bank. New regulations aimed at protecting bank customers came into effect in April, requiring banks to provide 90 days' notice and a written explanation before closing accounts. However, critics point out these protections may not apply to accounts opened before this date.
Nationally, more than 450,000 accounts were closed in Britain last year, a significant increase compared to a decade prior. Complaints to the Ombudsman regarding debanking rose by 69% in the three years leading up to 2023/24, reaching 3,858. This rise has been attributed to factors such as the reduction in local bank managers and challenges faced by older customers with online banking.
Walsham le Willows Sports Club, founded in 1892, began its relationship with Lloyds Bank in 1952. The club currently supports up to 24 youth teams in cricket and football.
The club's difficulties began in June of last year when it received a message regarding its account status via the bank's secure messaging system, which Campbell initially dismissed as spam. By September, a formal demand for documents was issued, with a 28-day deadline.
Campbell stated there was a back-and-forth exchange of information, with an impasse reached around December or January when the club was asked for information on three trustees unrelated to the bank accounts. Certified identification was requested, but one was reportedly rejected without explanation.
Contacting a local Lloyds branch proved unhelpful, as staff indicated they no longer handled business accounts. On April 22 of this year, the club's two accounts were closed.
Campbell's letters to Lloyds chairman Sir Robin Budenberg in May went unanswered, leading to the formal complaint and the subsequent opening of a new account with the £300 compensation. He considered the compensation inadequate given the reputational damage and effort involved.
The Ombudsman's process involves an initial investigation, with a legally binding decision made if the customer remains dissatisfied. The club has since opened a trading account with Virgin Money and is considering its options for the other account.
Fred de Fosard of the Prosperity Institute suggested that costly regulations have contributed to a "de-banking crisis" in Britain, leading to a risk-averse culture among financial institutions. He argued that while high-profile cases often focus on political beliefs, many ordinary organizations are also affected by account closures.
A Lloyds Bank spokesperson acknowledged that while checks were necessary, the experience "wasn’t as easy as it should have been." The bank apologized for the distress caused, stated it had reviewed the situation, compensated the club, and confirmed the account is now operating normally.