Customers at one of our biggest banks, HSBC, were told they couldn't take out large sums of cash from their bank accounts without explaining how they planned to spend the money. Many people have reacted angrily to the idea of such restrictions, but is this really an imposition on your freedom, or simply the best way for banks to protect their customers?
When you consider the mis-selling scandals, Libor rigging and excessive charges that have plagued Britain's banks, it's understandable that people are outraged by recent stories of customers being refused large cash withdrawals. Issues arose when HSBC quietly introduced new guidelines back in November 2013 asking staff to question the intentions of customers requesting large sums. Something got lost in translation and the bank admits some branches took this a step too far by refusing requests.
"By imposing restrictions upon customer withdrawals at a time when some bank analysts are pointing at HSBC's balance sheet, all the bank has succeeded in doing is stoking rumours," said Joel Benjamin of anti-bank campaign group Move Your Money. "If HSBC wants to impose restrictions upon the withdrawal of customer money, then it should start by being more transparent, revealing where customers' deposits are actually invested," he added.
HSBC has now explained that it is not mandatory for customers to provide documentary evidence for large cash transactions, and that failure to show evidence is not enough of a reason for staff to refuse a withdrawal or deposit, unless they are virtually certain of fraud.
"We apologise to any customer who has been given incorrect information and inconvenienced, and have since updated guidance to staff," said James Thorpe, a spokesman for HSBC.
Similar policies are actually in place at other banks and building societies; for example, Santander says that it may ask for additional ID or proof of the reason for large withdrawals and in some cases, the branch may not physically have enough cash available, so the bank asks for a couple of days notice when requests are made for large amounts, such as £5,000 in cash.
It seems sensible for banks to ask for notice before customers withdraw several thousand pounds over the counter – cash stocks are limited, particularly in smaller branches – but do they really need to know how you plan to spend your own money?
The banks say that these questions help to prevent fraud and in fairness they do have a duty of care towards customers, as well as legal obligations to prevent money-laundering. If you are asked by workmen to pay in cash, you may well be helping them to avoid paying tax. There is also "vishing" (voice phishing) and "courier fraud" whereby scammers phone customers posing as a member of the police or the bank. Upon telling them that their account has been hacked, customers are then urged to hand over their cards and withdraw cash to give to a motorcycle courier for safekeeping, never to see it again.
It isn't a very sophisticated scam, but these fraudsters also tell you to call the number on the back of your card or 999 for verification – in reality they do not hang up but stay on the line so that you are still speaking to them or one of their associates. The Financial Ombudsman Service (FOS) says it has seen an increase in these scams, with more than one hundred complaints referred to them in the last six months.
"Vishing and courier fraud target some of the most vulnerable people in society by duping them into transferring money directly into criminals' accounts, or handing over bank cards and personal identification numbers to couriers – in some extreme cases people have also handed over cash or jewellery," says Rory Stoves of the FOS.
Banks are also increasingly cautious about fraudulent credit and debit card activity abroad. When you use your card overseas, it is marked as an "abnormal" spending pattern and if you haven't told your bank you're going away, it may stop your card without warning. Not all banks will automatically block cards being used overseas but they might if an unusually large transaction or cash withdrawal is taking place. Banks and credit card firms often ring customers when they see a suspicious transaction so make sure they have your current mobile number.
If you inform your bank beforehand, you can usually avoid problems. Santander will put a "holiday flag" on your account and it can flag up to five destinations in one trip over a 90-day period. Issues can still arise, however, so play it safe and bring a 24-hour phone number with you so that you can release the block as quickly as possible.
It may also be worthwhile having more than one card to pay a bill, as you don't want the embarrassment and even potential legal consequences of being unable to pay a bill in a foreign country. In the UK you may be allowed to leave an address and then pay at a later date, but overseas the police could be called, which would certainly put a dampener on any break.
Ombudsman top tips
If you are worried about a call, phone the police non-emergency number 101 from a different handset, or allow five minutes for the line to clear
Police and banks will never ask for your PIN, bank details or cards. If you are called by someone who does, hang up.
Keep passwords and PINs safe – don't write them down.
If the call sounds suspicious or too good to be true, you may be right.
Check statements regularly for transactions you do not recognise.Reuse content