Bank wrong to close account based on allegations

Closing accounts,
Anahera went to the local branch of her bank to deposit a foreign cheque into an account she held jointly with her brother. Either of them could deposit or withdraw money from the account without the signature of the other. However, the teller insisted the account’s terms and conditions demanded that both signatures were needed before she could deposit the cheque. This was incorrect.
September 2019

Two days later, Anahera returned to the branch to try to deposit the cheque but was met with the same answer. Her frustration with the bank’s response led to the bank sending her a letter saying her behaviour had been unacceptable, and that it would consider closing her accounts if she continued to behave in this way towards staff.

Anahera complained to us, and we raised it with the bank. The bank then wrote to Anahera acknowledging its error. It offered $50 compensation and promised to give staff at the branch extra training in processing foreign cheques.

A month later, Anahera attempted to deposit another foreign cheque and experienced the same problem with two other tellers. She asked to speak to the branch manager, who confirmed Anahera was correct in saying that she or her brother – not both – could sign the deposit form. Anahera said she had made an audio recording of her interactions with the two staff and would be making a complaint. She lodged a complaint on the bank’s website later in the day.

The same day, the bank sent Anahera a letter giving her notice of its intention to close her accounts in two weeks’ time because of her abusive behaviour towards staff. It said it would issue a trespass notice against her if she entered the branch again. It questioned the legality of her audio recording and suggested she seek legal advice. It did not respond to the complaint she lodged because it was closing her accounts.

Our investigation

Anahera complained to us that the banks’ allegations of threatening and abusive behaviour were unfounded. She also complained that the bank had failed to honour its promise to give branch staff training in processing foreign cheques.

Generally speaking, a bank can end its relationship with a customer at any time. Similarly, a customer can move to another bank at any time. However, a decision to exit a customer on conduct grounds should be handled carefully. The Code of Banking Practice requires banks to act fairly, reasonably and in good faith. We consider this means the bank should, when considering closing a customer’s account:

  • ensure the assessment is made by someone independent, who has not been directly involved in interactions with the customer
  • examine all available information, including, if possible, CCTV footage
  • keep an open mind to the possibility that staff may have acted inappropriately
  • consider whether another course of action besides closure would suit everyone’s interests, such as a warning to the customer or offering remote banking services only.

We considered the bank had failed to follow an appropriate process before deciding to close Anahera’s accounts. It had made the decision to close Anahera’s accounts based solely on the staff members’ explanation of Anahera’s behaviour without reviewing the available CCTV footage or considering Anahera’s complaint. When we requested and viewed the footage, we were of the view Anahera’s behaviour was reasonable and innocuous – a view with which the bank subsequently agreed.

We were concerned the bank had failed to respond to Anahera’s complaint, particularly given that the bank had acted wrongly in relation to the foreign cheque.  We were also concerned by the bank’s response to Anahera’s audio recording.  The bank showed no interest in listening to it and had instead threatened her with legal action in relation to it.  We did not share the bank’s view about the recording being illegal and expressed concern about the bank threatening her with legal action.

We recommended the bank compensate Anahera for the stress and inconvenience it had caused her, and that it also send her a letter acknowledging its failings.


Anahera was happy with the outcome we facilitated.

Print this page