Lloyds Bank PLC · DRN-5829205

The complaint Ms O complains Lloyds Bank PLC unfairly closed her account. What happened The facts of the complaint are well known to both parties, so I will only provide a summary of the key points. Ms O is represented on this complaint, but I will refer to her directly throughout. Ms O held a Lloyds account and as part of review it placed blocks on the account on 7 February 2025. Following its review, Lloyds made the decision to immediately close the account on 17 February 2025. Ms O raised a formal complaint with Lloyds, explaining the closure of the account was unfair as she was given no notice of the closure or explanation regarding this decision. Lloyds reviewed these concerns and issued a final response letter on 10 April 2025. Lloyds explained there had been no error and the accounts had been blocked in line with the account terms and conditions, and its legal and regulatory duties. It confirmed that no information regarding the reason for closure had been reported on Ms O’s credit file, and no adverse fraud markers had been recorded against her name. Ms O referred her complaint to our service as she remained unhappy with how Lloyds handled her account and treated her. Ms O provided detailed submissions, which referenced regulatory duties and stated she was a minor – under 18 years of age, when it took this action, thus resulting in severe distress and contrary to regulatory guidance. An Investigator gathered the relevant evidence and in summary, made the followings findings: • Lloyds acted fairly in blocking the account as it has legal and regulatory obligations that it must adhere to. • Lloyds also acted in line with relevant account terms and conditions. • Lloyds isn’t obliged to give Mrs O a specific reason for its decision to close the account. Ms O remained unhappy and maintained Lloyds had acted unfairly, and she provided a detailed response. Ms O explained: • Lloyds acting in line with the account terms and conditions is not the legal test our service applies. We ought to consider what is fair and reasonable in light of the individual facts of the case. • Ms O referenced FCA guidance on how businesses shoyld treat customers and legislation to reiterate her position. Ms O the standards set out in these have not been met. • Lloyds failed to communicate property and abruptly closed the account with no notice, and it failed to engage in communication with Ms O. In order to remedy matters, Ms O has asked for Lloyds to provide a full written reason for the restriction of closure of the account, a reinstatement of the account, a letter of good

-- 1 of 4 --

standing, her full transaction history, and assistance in seeking services elsewhere. Ms O also asked for compensation to be awarded in light of the distressed caused her. As no agreement could be reached, the complaint has been passed to me – an ombudsman – for a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I appreciate Ms O was disappointed by the Investigator’s opinion. I’d like to reassure Ms O that I’ve considered the whole file and what’s she and her representative have provided. But I’ll concentrate my comments on what I think is relevant. If I don’t mention any specific point, it’s not because I failed to take it on board and think about it, but because I don’t think I need to comment on it to reach what I think is a fair and reasonable outcome. No discourtesy is intended by me in taking this approach. Our rules allow me to take this approach. It simply reflects the informal nature of our service as a free alternative to the courts. I’ll start by setting out some context for the review of Ms O’s accounts. UK legislation places extensive obligations on regulated financial businesses. Financial institutions must establish the purpose and intended nature of transactions as well as the origin of funds, and there may be penalties if they don’t. This applies to both new and existing relationships. These obligations override all other obligations. In Ms O’s case I’m satisfied Lloyds was complying with these obligations when it reviewed Ms O’s account. Lloyds has provided submissions to this service in confidence. We may treat evidence from banks as confidential for a number of reasons – for example, if it contains security information, or commercially sensitive information. Having reviewed this evidence, I am treating this information in confidence, which is a power afforded to me under the Dispute Resolution Rules (DISP), which form part of the Financial Conduct Authority’s regulatory handbook. This means I haven’t been able to share a lot of detail with Ms O, but this information is key in determining Ms O’s complaint. So, I must consider it carefully when making a determination. Ms O’s account terms and conditions also allow Lloyds to block the account in specific circumstances. Ms O says she was unable to use her debit card when the account was blocked. When an account is restricted in this manner all payments – including use of a debit card will stop. I understand Ms O’s frustration with the block, and I don’t doubt it would’ve had a detrimental impact on her. But I consider the block to be necessary to ensure Lloyds was able to comply with its legal and regulatory requirements. Ms O says relying on the account terms and conditions alone is unfair, as our service should consider the wider circumstances of her complaint as she is vulnerable. I can assure Ms O that I have looked at the account terms and conditions, alongside Lloyds’ legal and regulatory duties as a whole when considering her complaint. Although our approach is to establish what we consider to be fair and reasonable, this is done with due consideration of key factors such as the account terms and businesses wider regulatory duties. Lloyds’ review of Ms O’s account led to its ultimate decision to close the account. I understand Ms O feels this decision was unfair, especially as no notice or explanation was given to her. Ultimately, Lloyds is entitled to set their own policies and part of that will form their risk criteria. It is not in my remit to say what policies or risk appetite Lloyds should have in place. I can however, while considering the circumstances of individual complaints, decide whether I think customers have been treated fairly. As long as they reach their decisions fairly, it doesn’t breach law or regulations and is in keeping with the terms and conditions of

-- 2 of 4 --

the account, then this service won’t usually intervene. They shouldn’t decline to continue to provide banking services without proper reason, for instance of unfair bias or unlawful discrimination. And they must treat new and existing customers fairly. Given its regulatory and legal obligations, I’m satisfied Lloyds’ decision was made fairly. The terms and conditions of Ms O’s account set out that the bank can close the accounts immediately. In this case Ms O’s case the account was restricted and then it closed with immediate effect. For Lloyds to act fairly here it needed to meet the criteria to apply their terms for immediate closure. In my view, I consider the evidence Lloyds held to be sufficient for it to close Ms O’s account with immediate effect. I understand this would’ve had an impact on Ms O – the closure of an account in this way will inevitably result in some distress and inconvenience. I also accept Ms O was a minor and this would’ve made the closure particularly upsetting – but the terms of the account she held allowed Lloyds to take this action. I find Lloyds’ decision to block and close the account appropriate, and I don’t think Lloyds ought to compensate Ms O for the issues she says she experienced as a result of its actions. Ms O says she and her family are long standing and loyal customers of Lloyds and UK citizens. I understand Ms O’s sentiment here, but this isn’t a factor I would reasonably expect Lloyds to consider. Its internal processes and the application of its legal and regulatory duties will override such considerations. Ms O has also asked for Lloyds to provide him with assistance in obtaining banking elsewhere and has asked for a letter of good standing. I don’t think it is necessary for Lloyds to take these steps. It has confirmed it hasn’t recorded any adverse markers against Ms O, and her credit file hasn’t had specific details recorded about its reason for off boarding her. Ms O therefore ought to be able to obtain services elsewhere, without assistance from Lloyds. A key issue for Ms O is her assertion that Lloyds has taken these actions as it has erroneously linked a relative to her profile to a different individual who is sanctioned. This in turn has affected Ms O’s account. Ms O says this error is the root of the issues she has experienced, and she has provided evidence to support this position. I’ve considered Ms O’s comments carefully – alongside the evidence she has provided. I must weigh this evidence against the information provided to me by Lloyds. As noted, this information has been provided in confidence, so I am unable to share specific details with Ms O. However, I find Lloyds has followed the appropriate steps in Ms O’s case and taken reasonable measures to ensure the information it is relying on is both accurate and relevant. Ms O says Lloyds have discriminated against her and the closure is due to her Russian heritage. I have obtained further information from Lloyds regarding this point, and it has explained the closure was not in any way based on discriminatory factors, and the process it followed for both the review and closure were based on a clear internal process which is objective. I can appreciate Ms O’s perspective on this point, but it is not my role to decide whether discrimination has taken place – only the courts have the power to decide this. I have, however, considered the relevant law in relation to what Ms O has said when deciding what I think is the fair and reasonable outcome. Part of this has meant considering the provisions of The Equality Act 2010 (The Act). And after looking at all the evidence, I’ve not seen anything to suggest that Lloyds treated Ms O unfairly. While I appreciate how Lloyds restricting and closing the accounts made Ms O feel, I have to consider if other customers in similar situations would have been treated the same way. Having looked at all the evidence, I haven’t seen anything to show that Lloyds would have treated another customer with similar circumstances any differently than Ms O. Based on the information I’ve seen Lloyds has based its decision on legal and regulatory factors. So, I can’t say Lloyds treated Ms O unfairly because of her Russian background.

-- 3 of 4 --

I can see in Ms O’s submissions to our service she has referred to UK caselaw and regulatory guidance to support her position. I’ve thought about these submissions, and I must highlight that when reviewing complaints this service considers a wide range of sources – this includes the law, regulatory guidance and good industry practice. I can assure Ms O that our approach to cases of this nature factors in these various sources and issues. Taking all of this into consideration I am satisfied Lloyds has acted appropriately in the specific circumstances of Ms O’s case. Ms O has also raised points about how Lloyds has handled her account and questions whether its actions are in keeping with recent regulatory and government guidance. It is the role of the Financial Ombudsman Service is to resolve individual complaints and to award redress where appropriate. We do not perform the role of the industry regulator, and it is not our role to comment on how businesses conduct their operations. That’s the role of the regulator, the Financial Conduct Authority (FCA). So I’ve thought about Ms O’s comments in relation to her complaint, and I can’t say Lloyds has acted contrary to the guidelines in place and his wider concerns aren’t something this service can comment on in the detail she would like. I know this will not be the outcome Ms O was hoping for, and I know she will be disappointed with the decision I’ve reached. I hope it provides some clarity around why I won’t be asking Lloyds to take any further action to compensate Ms O. My final decision My final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms O to accept or reject my decision before 21 April 2026. Chandni Green Ombudsman

-- 4 of 4 --