Guide To Understanding Personal Bank Account Rights & Laws

Having a bank account is essential when it comes to facilitating your life and running your personal finances effectively

. The following easy guide is designed to help you keep on the right track by outlining the key rights and laws both you and your bank or building society are entitled to.

Proof of Identity

UK law stipulates that banks and building societies are required without fail to properly identify new customers when they sign up with them so that criminal activities such as money laundering can be prevented. Thus, most financial institutions will need you to provide a government-issued document with a photograph for identification. The best means of providing this would be a valid passport. If you want to use an old-style driving licence (this wont have a photo), you must accompany it with another document, such as confirmation of identity from an educational institution, a letter from a government department or local council confirming your right to benefits or a letter from a care home manager.

Banking institutions will copy these documents, but they are also required by law to protect all your personal data.

Bank Account Changes

Banks and building societies are legally permitted to change their terms and conditions these might differ from what you originally signed up for. They must give you a minimum of two months notice of any changes to give you enough time to make other arrangements or to close your account if you so choose.

Interest Rate Reductions

If they intend to lower their interest rates on your current account or instant access account, banking institutions must give you two months notice before the reduction, unless it works in your favour. For other accounts, such as notice or term deposits, your bank is still under legal obligation to notify you in advance of their rate reductions if it will " make a significant difference" to your finances.

Right of Set Off

What this means is that banks and building societies have a legal right to take money from one of your accounts that are in credit to make payments due on another account that is not sufficiently paid off, if the situation calls for it.

Blocking Your Account

Banking providers are also allowed to stop or block your card if they have reasonable cause, but they must notify you of this and clearly tell you the reason why. Grounds for a block include the suspicion that your card is being used for fraudulent or unauthorised purposes. For this reason its always a good idea to ring your bank and let them know if you are going overseas, since this can be a common red flag for unusual activity. The only time notification would not happen is if they have good cause to suspect money laundering and would not want to tip off the criminal until a full case has been built.

Liability for Unauthorised Transactions

Unless your banking provider believes you acted fraudulently or were "grossly negligent" in keeping your details safe, you have a maximum limit on being liable for unauthorised transactions before reporting them of 50.

Banking Mistakes

Your bank or building society has a legal duty to refund you if they make any errors, such as if a payment is made incorrectly or without your permission. This also applies if a transaction goes wrong due to their mistake.

Conclusion

The above guide describes some of the major rights both you and your bank or building society hold when it comes to the running of your personal bank account. The main thing you can do to prevent any problems occurring is to keep a vigilant eye on the incoming and outgoing activities of your account, so that any issues can be quickly resolved.

by: Sean Raston

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