If your bank has acted incorrectly when closing your account the Financial Ombudsman service can make a ruling to decide the level of compensation the bank must pay you for distress and inconvenience.
The full guidance on how much money is likely to be paid to you can be found HERE but whilst comprehensive it is a long read – so below is a summary of what the ombudsman says.
Quoting directly from the ombudsman website
A banks mistake can affect you practically or emotionally, as well as financially. For this reason, the rules we follow say that we can award fair compensation if you’ve experienced any of the following:
- distress
- inconvenience
- pain and suffering
- damage to your reputation
We’re all inconvenienced at times in our day-to-day lives – and a certain level of frustration and minor annoyance is expected. For us to make an award we’d need to see that the impact of a business’s mistake was more than someone would expect to experience as part of everyday life, such as a business’s phone lines being busy.
We listen carefully to both sides, looking at the facts and evidence when assessing the impact, to decide what’s fair.
When deciding what amount of compensation would be fair in a case, we may also take into account:
- The time you took sorting out a mistake – we may ask you to provide some detail about what you did and the time this took. When considering your time and how you’ve been inconvenienced, we don’t usually consider, for example, someone’s hourly rate. Instead, we’ll look at the overall impact the business’s mistake had on you.
- The impact on your health – and we may ask you for some more detail to support how you’ve been impacted.
- Whether there was anything you could have done to reduced the impact of the business’s mistake. A business’s mistake can start a chain of events – and sometimes it wouldn’t be fair to hold the business responsible for all the resulting effects on you. So we’ll carefully consider the circumstances to decide what impact flows from the original error.
Typically, an apology or small monetary award of less than £100 will fairly compensate a one-off incident or occurrence – such as a small administrative error or a short delay. An apology is usually enough to remedy these types of mistakes, as long as they cause minimal impact and are put right quickly.
Using financial services won’t always be totally hassle free and we wouldn’t award for things that aren’t more serious than the normal nuisances of everyday life. So just because there’s been a mistake it doesn’t necessarily follow that we would always award compensation – especially when the impact is minimal.
If an error has caused the consumer more than the levels of frustration and annoyance you might reasonably expect from day-to-day life, and the impact has been more than just minimal, then an apology won’t be enough to remedy the mistake.
An award between £100 and £300 might be fair where there have been repeated small errors, or a larger single mistake, requiring a reasonable effort to sort out. These typically result in an impact that lasts a few days, or even weeks, and cause either some distress, inconvenience, disappointment or loss of expectation.
An award of over £300 and up to around £750 might be fair where the impact of a mistake has caused considerable distress, upset and worry – and/or significant inconvenience and disruption that needs a lot of extra effort to sort out. Typically, the impact lasts over many weeks or months, but it could also be fair to award in this range if a mistake has a serious short-term impact.
An award of over £750 and up to around £1,500 could be fair where the impact of a business’s mistake has caused substantial distress, upset and worry – even potentially a serious offence or humiliation. There may have been serious disruption to daily life over a sustained period, with the impact felt over many months, sometimes over a year. It could also be fair to award in this range if the business’s actions resulted in a substantial short-term impact.
An award of over £1,500 and up to around £5,000 is appropriate where the mistakes cause sustained distress, potentially affecting someone’s health, or severe disruption to daily life typically lasting more than a year. A mistake that has an extremely serious short-term impact could also warrant this level of compensation, but usually you’d expect some ongoing or lasting effects.
Examples at the higher end could include where the effects of the mistake are irreversible or have a lasting impact on someone’s health or even resulted in a personal injury.