Can I Sue My Bank? (UK)

Banks make mistakes, treat customers unfairly, and sometimes act in ways that cause real financial harm. Whether it’s an erroneous fee, a rejected mortgage application, a frozen account, or mis-sold products, you might be wondering if you can take legal action. This guide explains when you can sue your bank and the alternatives that often work better.

This article is for informational purposes only and does not constitute legal advice.

The Short Answer

Yes, you can sue your bank—but the Financial Ombudsman Service (FOS) is usually a better first step. The Ombudsman is free, can award up to £430,000, and banks must comply with their decisions. Court should be a last resort or for claims exceeding the Ombudsman’s limits.

Common Reasons to Take Action Against Banks

Account Errors and Negligence

Processing payments incorrectly
Applying wrong interest rates
Failing to stop fraudulent transactions
Closing accounts without proper notice
Freezing accounts without good reason
Errors in mortgage administration

Mis-Selling Financial Products

Payment Protection Insurance (PPI) – though the deadline has passed, some related claims continue
Packaged bank accounts with unwanted features
Unsuitable investment products
Mortgages that weren’t affordable
Insurance products you couldn’t claim on

Unfair Treatment

Unreasonable charges and fees
Discrimination (refusing services based on protected characteristics)
Poor handling of financial difficulty
Unfair treatment of vulnerable customers
Refusing to refund fraud victims (when they should)

Data and Security Breaches

Data breaches exposing your personal information
Sending your information to the wrong person
Failing to protect your account from fraud
Wrongly reporting information to credit agencies

Your Legal Rights Against Banks

Consumer Rights Act 2015

Banks must provide services with reasonable care and skill. Contract terms must be fair. If they breach these standards, you may have a claim.

FCA Regulations

The Financial Conduct Authority requires banks to:

Treat customers fairly (TCF principles)
Act with integrity
Take reasonable care to meet customers’ needs
Communicate clearly
Not create barriers to switching or closing accounts

Since July 2023, the Consumer Duty requires banks to deliver good outcomes for retail customers.

Data Protection (UK GDPR)

Banks must protect your personal data. Breaches can result in compensation claims through the courts or the Information Commissioner’s Office (ICO).

Equality Act 2010

Banks cannot discriminate based on protected characteristics (age, disability, race, sex, etc.). Refusing services based on these grounds is illegal.

The Financial Ombudsman Service: Your Best Route

Website: www.financial-ombudsman.org.uk
Phone: 0800 023 4567

The Financial Ombudsman is a free, independent service that resolves disputes between consumers and financial businesses.

What the Ombudsman Can Award

Up to £430,000 in compensation (for complaints about acts after 1 April 2024)
Correction of records – including credit file entries
Apologies and explanations
Interest on money owed
Compensation for distress and inconvenience

How to Use the Ombudsman

Complain to your bank first – They have 8 weeks to respond
If unresolved, contact the Ombudsman – Within 6 months of the bank’s final response
Provide evidence – Statements, correspondence, records of losses
Wait for investigation – Usually several months
Receive a decision – Binding on the bank if you accept it

Success Rates

The Ombudsman upholds around 30-40% of banking complaints in favour of consumers. Complaints about fraud and scams have particularly high success rates when banks haven’t followed proper procedures.

When to Actually Sue Your Bank

Consider court action if:

Your claim exceeds £430,000
You’re not satisfied with the Ombudsman’s decision – You can still go to court
Time limits are an issue – Court has different limitation periods
You want to set a legal precedent
It’s a class action – Multiple people with the same complaint

Types of Legal Claims

Breach of contract: Your bank account is a contract. Failing to process transactions properly, applying wrong rates, or closing your account wrongly may breach it.

Negligence: Banks owe a duty of care. Careless errors causing financial loss can be negligence.

Breach of statutory duty: Breaking FCA rules may give rise to civil claims.

Data protection claims: Under UK GDPR, you can sue for damages caused by data breaches.

Major Bank Scandals and Compensation

Banks have paid billions in compensation for misconduct:

PPI Mis-Selling

The biggest financial scandal in UK history. Banks paid out over £38 billion in PPI compensation. The deadline for new claims was August 2019, but related complaints continue.

Packaged Bank Account Mis-Selling

Fee-paying accounts sold to people who couldn’t use the benefits. Millions paid in compensation. No deadline – you can still claim.

Interest Rate Hedging Products

Small businesses mis-sold complex interest rate products. Banks paid over £2.2 billion in redress.

Authorised Push Payment (APP) Fraud

Customers tricked into sending money to fraudsters. Since 2019, the voluntary CRM Code requires signatory banks to reimburse victims in many cases. From October 2024, mandatory reimbursement rules apply.

RBS/NatWest GRG Scandal

RBS’s Global Restructuring Group was found to have mistreated struggling businesses. Compensation schemes paid out hundreds of millions.

Can I Sue for Refused Services?

Banks sometimes refuse accounts, mortgages, or loans. This is usually legal unless:

It’s discriminatory – Based on race, disability, age, etc.
They haven’t followed their own processes – Internal policies create expectations
They gave misleading information – Causing you to act to your detriment
It breaches the basic bank account rules – Everyone has the right to a basic bank account

Basic Bank Accounts

Since 2016, the nine largest banks must offer basic bank accounts to anyone legally resident in the UK. They cannot refuse you for:

Bad credit history
Low income
Receiving benefits
Previous bankruptcy

If refused a basic account unlawfully, complain to the Ombudsman.

Frozen Accounts: What Are Your Rights?

Banks can freeze accounts for fraud prevention, anti-money laundering checks, or court orders. However:

They must tell you why (unless legally prevented)
They should act proportionately
They can’t freeze indefinitely without reason
You may be entitled to access funds for essentials

If your account is frozen unreasonably, causing you loss, you may have grounds to complain or sue.

How to Build Your Case

Document everything – Statements, letters, emails, call records
Calculate your losses – Direct financial loss plus consequential damages
Get evidence of impact – If it affected your health or wellbeing, get records
Check the bank’s policies – Did they follow their own rules?
Research similar cases – The Ombudsman publishes decisions
Consider expert advice – For complex cases, consult a solicitor

Template: Formal Complaint to Your Bank

Dear [Bank Name] Complaints Department,
FORMAL COMPLAINT
Account number: [Your account number]
I am writing to make a formal complaint about [describe the issue clearly].
What happened:
[Describe the facts – dates, amounts, what went wrong]
Impact on me:
[Explain how you were affected – financial loss, distress, inconvenience]
What I want:
[Be specific – refund of £X, correction of credit file, compensation for distress, apology]
I expect a response within 8 weeks as required by FCA rules. If I am not satisfied with your response, I will escalate my complaint to the Financial Ombudsman Service.
Please acknowledge receipt of this complaint within 5 working days.
Yours faithfully,
[Your name]

Time Limits

Financial Ombudsman

6 years from the event complained about, OR
3 years from when you knew (or should have known) you had cause to complain
6 months from the bank’s final response to bring it to the Ombudsman

Court Claims

6 years for contract and negligence claims (Limitation Act 1980)
6 years for data protection claims
3 years for personal injury (if stress caused health problems)

Key Contacts

Financial Ombudsman Service: www.financial-ombudsman.org.uk – 0800 023 4567
Financial Conduct Authority: www.fca.org.uk – Report misconduct
Information Commissioner’s Office: ico.org.uk – Data protection complaints
Citizens Advice: www.citizensadvice.org.uk

Summary

You can sue your bank, but the Financial Ombudsman is usually better. It’s free, can award substantial compensation, and banks must comply. Court action makes sense for very large claims, when the Ombudsman can’t help, or when you want to establish legal precedent.

Banks are not above the law. They’ve paid billions in compensation for misconduct. If your bank has treated you unfairly, caused you financial loss, or breached your rights, you have options. Document everything, complain formally, and escalate if necessary.

For more on financial disputes and UK consumer rights:

Need free legal advice? See our guide to free legal help in the UK.

Can I Sue My Bank? (UK)

The Short Answer