What stops a bank from taking clients' money

[vladlnd]

Hi All, looking for an answer to what seems a trivial question.

What stops a bank from deliberately withdrawing funds from a client's current account and using them as they wish?

I was reading CASS (Client Assets Sourcebook) issues by FCA for about an hour, but couldn't find a direct answer. CASS 5 which deals with Client Money apparently does not apply to banks.

What would stop a bank from saying to a customer "We've taken these 100K from your account accourding to our T&Cs because we needed this money"?

Thanks in advance!

[des8]

If you're with a bank whose T&Cs state they can take money from your account because they need it, my advice is you take your money out and deposit it elsewhere.

Banks do have the right of set-off, but only under certain conditions

[vladlnd]

If you're with a bank whose T&Cs state they can take money from your account because they need it, my advice is you take your money out and deposit it elsewhere.

Banks do have the right of set-off, but only under certain conditions

Many banks state in their T&Cs that they can "remove" funds based, for example, on a suspicion of fraud. There's no requirement for actual fraud to occur, and banks would always take a stance they can't say a word of explanation in order not to tip-off per AML laws. This essentially amounts to banks' T&C allowing them to take whatever money they want at any time without any explanation. Unless, of course, there's something in the regulation that may stop them. This is what I'm trying to ascertain.

But I don't want to divert the thread to discussing fraud. I just want to find the regulations that actually require banks not to mess with clients' funds.

[des8]

There has been a clamp down on financial crime and under the EU Anti-Money Laundering Directives , banks are obliged to vet accounts for possible money-laundering.
Government regulations oblige banks to monitor customers accounts for potential money laundering or financial crime, and any uncharacteristic transactions can trigger fraud filters. Under the Proceeds of Crime Act 2002 banks are not allowed to tip off a customer that an investigation may be underway.

You are looking for the regulations.

There will not be a regulation saying banks cannot remove money from a customers account without a reason.
There are regulations allowing banks to remove money when there is reason.
However they won't be written in such plain language!
You might find this document a lead in to the regulations you want to see:*https://www.handbook.fca.org.uk/handbook/FCG.pdf
and also Money Laundering Regulations 2007

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[vladlnd]

There will not be a regulation saying banks cannot remove money from a customers account without a reason.

In that case what protection does a customer have if a bank withdraws funds from their account without a reason? If there's no regulation to that effect as you say, can't banks just get away with that?

[des8]

Civil action

[vladlnd]

Civil action

That's what I'm asking. How do you make a case that a bank did not have right to withdraw money from your account? What laws or regulations don't let banks do that?

[des8]

Try: Banking Conduct of Business source book.
Schedule 5 is the bit you need