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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3614
Experience:  Solicitors 2 years plus PQE
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I run a not company. Six years ago we reincorporated

Customer Question

I run a not for profit company. Six years ago we reincorporated as a cic limited by guarantee from a company limited by shares.
Company 1 was renamed and the assets transferred to the current company.
It transpired last year that our bank had not updated or changed the constitution and there was no paper trail to address this. Additionally, we had been issued temporary overdrafts and verbally had the new company number cited to us.
Last July, they addressed this when we asked for another overdraft. They said they could freeze our account but accepted partial accountability so told us to open a new account. We sent in the paperwork & received an email to say there was a backlog of accounts to open. We answered another email to address a question and heard nothing since. Three weeks ago they froze our account pending investigation.
We have sent in our company accounts registered with Companies House & various documents. The CIC Regulator has confirmed we followed procedures but has no paper evidence. Our accountants have confirmed to them that there is no legal transfer of asset form because of the size and scope of the assets (around £1,000) but they are still insistent that there needs to be a form.
Any advice on how I address this would be more than welcomed. I am a not for profit business working with disengaged young people and am at risk of having to stop my projects in case I can't pay staff.
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
What is the value of the funds in the account?
Have the bank provided you with a written explanation as to why they have frozen the account?
Kind regards
AJ
Customer: replied 2 years ago.

Hi

Yes they sent us a letter to say they had been notified on the 27th February that the company had been dissolved so they had frozen our account.

However, we also spoke to them last July about this. They said on the phone they were partially accountable so were not going to freeze the account but removed the overdraft / told us to set up a new account. We received an email to say they had a backlog and addressed a query whilst continuing to use the bank account.

We now arrive at the current situation, which I understand on a technical level, but I do not understand how it works if they let me use the old account knowing the details to be incorrect.

Many thanks

Louise

Customer: replied 2 years ago.

Sorry, I should have also said there is now £14,000 in the account. Last July there was I believe no more than a couple of thousand (but I would have to confirm the statements)

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Can you confirm are you named on the banking mandate?
Are you / were you the only shareholder of the old company?
Kind regards
AJ
Customer: replied 2 years ago.

Yes.

There were two shareholder directors - myself and my colleague who were director/shareholders of the old company and directors of the new company.

Also, I don't know if it is relevant but the bank letter states they have been notified of the dissolution with a date of February. However, they were actually aware of it in July 2014 and continued to let me use the account.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The reason why you can still use the account is probably because you as the shareholder are the beneficiary of the dissolved companies assets.
I can suggest the following:
- Consider moving to another bank if the situation is unworkable;
- Write to the bank and notify them that the company will suffer loss and damage if they do not immediately rectify this issue. Say to them you will seek to hold them responsible for any losses suffered by the company as a result of their inaction.
- I would say to the bank if they do not sort the issue out within 48 hrs you reserve the right to complain to the Financial Ombudsman - www.financial-ombudsman.org.uk/
- Say to them that by not following your reasonable instructions they are potentially in breach of the banking mandate - and according you reserve the right to potentially bring a County Court claim against them for any loss suffered as a result of their breach.
Have they given you any estimate as to when this will be dealt with?
Kind regards
AJ
Customer: replied 2 years ago.

Hi

This is really helpful - thank you. Could I just clarify something ... We are at the end of two and half weeks of waiting for an answer from them. They have also ignored my communication for the past three days.

If we can demonstrate that we have complied with their instructions last July, can we then continue with the points you have raised above? This is my sticking point - I believe they shouldn't have let us continue to use the account from that point on because I believed my assets were safe and now they seem not to be.

Consequently they have built up and now the business is at the point where it will begin to suffer because of this.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
If the use of the account caused the bank to be in breach of the banking mandate then you can certainly raise this point. Presumably you had no reason to suspect that you should not have been using the account - in which case it was the banks responsibility to freeze it.
Ultimately banks are required to treat you fairly and delays in dealing with your complaint or ignoring your concerns - would support any claim to the FoS that you have not been treated fairly.
Kind regards
AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3614
Experience: Solicitors 2 years plus PQE
Alex J. and other Law Specialists are ready to help you
Customer: replied 2 years ago.

Thank you very much!

Expert:  Alex J. replied 2 years ago.
Hi,
No problem I wish you the best of luck.
Please do not hesitate to contact me if I can assist any further.
Kind regards
AJ
Customer: replied 2 years ago.

You've been really helpful thank you. I think the point is exactly that - I was given no reason to believe that I couldn't use the account by the bank until they set up a new one.

Really do appreciate your help.

Expert:  Alex J. replied 2 years ago.
No problem.
Thank you for your kind feedback.
Kind regards
AJ

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