Richard promptly gave his bank evidence showing the matter was a civil dispute among company directors, but it did not lift the freeze for 16 days. When it did so, it maintained a hold for seven weeks on the remaining $360 of disputed funds in one of his accounts.

Richard complained to us that his bank had wrongfully frozen all his accounts when the matter was clearly a civil dispute, and that he had suffered a lot of stress, business disruption and inconvenience as a result of the bank's actions.

Our investigation

We found the bank’s terms and conditions entitled it to freeze two of Richard’s three accounts – the personal account into which he deposited the disputed funds and a business account into which he transferred those funds. However, it was not entitled to freeze a third account, which had nothing to do with the disputed funds. 

A bank cannot freeze an account indefinitely. Rather, it must apply its terms and conditions in a fair and reasonable manner, taking all reasonable steps to ensure it does not freeze an account any longer than necessary, while also having a process in place to end the freeze.

We found the bank breached its obligations by failing to act promptly after receiving the clarifying information from Richard, and also that it failed to communicate clearly and effectively with Richard while the accounts were frozen. It then failed to handle Richard’s subsequent complaint effectively. 

We found Richard suffered significant stress and inconvenience as a result of the bank's failures, which affected his health and business. We recommended to Richard and the bank that it pay him $4,000 in recognition of this stress and inconvenience.

Outcome

Richard accepted the $4,000.