Royal Bank of Scotland Review

Overall Rating

Prompt replies and neat environment

Rigid policies - inconsiderate towards customers
High charges

I was a current account holder with the Royal Bank of Scotland for six-and-a-half years. During this period I have always abided by the banking laws, have never defaulted on any account and possess a clean / ideal credit-rating with all credit scoring agencies of Britain.

I have been selling a few household gadgets over the internet. During this course, I was victimised by fraudsters who sent me fake cheques as payment of goods they were purchasing from me. I deposited the cheques in my account to find that they were fake cheques issued by cheaters. As a result my bank account was frozen and I was asked to explain as to where did I get the cheques from. This happened three times in a year. Every time I co-operated with the bank by supplying their investigating team with a complete set of e-mails exchanged between me and the cheaters. I also provided the bank with the name and address of the person buying goods from me. Every time I was exonerated from all charges as I had nothing to do with making any such counterfeit document at any stage. At the request of the bank, I even went to the Police to register a complaint against a cheater who had tried to swindle me by supplying me with an illegitimate cheque. The Police, however, refused to register any such complaint, as neither of the concerned parties had registered any loss on any account.

Last of all, it was on 24th January 2006 that I received a cheque from America as payment for goods I had sold. Keeping in view the past negative experiences, I took the cheque personally to the Harrow Branch of Royal Bank of Scotland and explained to the Bank Officer on duty that I do not want to deposit this cheque in my bank account before verifying the same. I was told that there is no way that the Royal Bank of Scotland can verify whether a cheque is genuine or not without depositing the same in an account. I told the Officer on duty that I do not want my bank account to be affected in any way by depositing this cheque and hence I will not deposit this cheque until I am absolutely sure that this is a genuine document. I was advised that I should present this cheque for special clearance. This way my bank account will neither be affected and nor will the amount be credited into my bank account unless the cheque is cleared. The advice was followed only to find later that the cheque was a bogus document and that I have to get a new debit card immediately. The advice was observed.

On 27th March 2006, the Royal Bank of Scotland unilaterally decided to close my six-year old current account and wrote a letter informing me that this decision was non-negotiable. No reason was given in the letter as to why my account closed. I wrote a protest letter to the bank, but to no avail. The bank has refused to discuss this matter with me at any level.

Finally, as my account had an OD limit on it and I was overdrawn within the limits of my OD, I was asked to deposit the entire amount overdrawn of £2000 within seven days. I once again contacted the bank to ask for more time as it was not possible for me to repay the amount within such a short span. But the bank authorities were rigid and inflexible. I have now been served a default notice threatening me of passing the information about my indebtedness to credit reference agencies.

Now I am in a fix. I do not have the money to repay the bank in one go, and my credit-rating is at stake for no mistake of my own.

I decided to contact the Financial Ombudsman Service to file a complaint against this gross injustice. I was astonished to hear that the Financial Ombudsman cannot deal with a complaint concerning a bank's commercial judgement in a decision about lending or security. This includes decisions about risk and about other financial or commercial criteria. In such matters the Financial Ombudsman can only deal with complaints about maladministration by the bank. Maladministration may include a relevant mistake, undue delay, conflicting information or advice, improper discrimination or failure to follow bank procedures properly. In short, according to the Financial Ombudsman Service, the bank has the right to close a customer's bank account if it no longer wishes to offer the service to an individual. However, the bank should give the customer 28 days notice of closure to enable the customer to find alternative banking arrangements.

The questions to ponder from the episode narrated above are:
How can a consumer / member of the public find out whether the cheque he has received in the post is genuine or fake?
Why is a genuine account holder penalised for no mistake of his own?
Why can a bank in the UK close a bank account at any time without giving any reason what-so-ever?
Why can RBS threaten to destroy the credit rating of genuine account-holders, who are being victimised both by cheaters and the bank simultaneously?

In my opinion, this is an unjust practice and it must be stopped by amending the financial laws of the country. Any bank should not be allowed to penalise an account-holder unilaterally by closing his/her account without giving any reason. The Financial Ombudsman should be empowered to question banks' decisions about discontinuing provision of banking services to any individual, especially when the account holder is not at fault.

Members' Comments onrehmankhan's Review

• ias on 29th Jan 2008

  It is only when a Bank (Firm) fails in its procedure and one seeks redress that you realise that the 'Banking Code and the Financial Ombudsman Service with their Rules & Regulations are more suited and protective of Banking Procedures than the consumer. To establish Maladministration of a Commercial Lending Procedure one has to establish when the bank agreed to lend and when said process finalised - THIS SHOULD RAISE THE QUESTIONS! When I presented my case to the Ombudsman, though the bank sent me a debenture confirming their agreement to lend in the first of March 2004 (debentures can take an average of 3 weeks to produce) the FOS decided that the bank agreed to lend in March 2004. Now how could a bank decide to lend in the first week of March 2004 and also produce a debenture the exact same period? In my case, the bank agreed to lend in the first week of January 2004 then finalised the commercial loan process intended for my start-up business at the end of May 2004. Such a long delay proved financially detrimental to my business start-up thus preventing my business from trading. The FOS was not interested in confirming when the bank agreed to lend following its cred-checking of our Company and directors in December 2003. The FOS was not even curious to find out why did the bank take so long to fund the start-up when it should only take an average of 5-weeks? When we disagreed with the Ombudsman's conclusion, we wrere advised to go to their Service Review Team. Now, the FOS 'review team' were meant to look over areas that it is believed was not tackled by the Ombudsman. When I explained that the area to establish Maladministartion was not dealt with by the Ombudsman their response was "we
  are not allowed to challenge the Ombudsmans conclusions to a case!" So, what is the point of their department? I then took my complaint further to the Independent Assessor, who is meant to be 'independent', but with an obvious narrow remit. Again, his response was... "we are not allowed to challenge the Ombudsmans conclusions to a case!" It seems as if these two bodies simply are erected to 'protect' the rather unspecific 'Banking Code' rather than addressing the failings in procedures of a bank. It is a disgrace how these bodies fail to address the needs of the consumer!! I will continue my fight with continued stress! GIVE ME STRENGTH!!