HSBC Limits Customer Withdrawals in the UK

The money that's in your bank account is yours, right? To do with as you want. Apparently that isn't true not anymore, at least not for the UK customers of HSBC  according to the BBC:


“Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt. Listeners have told Radio 4's Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000.

HSBC admitted it has not informed customers of the change in policy, which was implemented in November. The bank says it has now changed its guidance to staff.

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem.

But this time it was different, as he told Money Box: "When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved."

Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' " He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

He wrote to complain to HSBC about the new rules and also that he had not been informed of any change. The bank said it did not have to tell him. "As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change," HSBC wrote.

Mr Cotton cannot understand HSBC's attitude: "I've been banking in that bank for 28 years. They all know me in there. You shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours."


(emphasis added)

We should add to this, since the bulk of bank liabilities in the form of demand deposits consist of fiduciary media – numbers in accounts, for which no backing in the form of standard money actually exists – bank customers are at all times exposed to considerable risk. De facto, fractionally reserved banks are insolvent vis-a-vis their demand deposit holders (or at least a very large percentage of them). When people withdraw currency, it lowers the banks' ability to engage in fractional reserve lending, as a 'reverse multiplier effect' sets in, since they must actually pay out standard money (in times of 'QE' this is presumably no longer  such a big problem though, as excess reserves have become very large).

A bank that tries to limit withdrawals should therefore normally immediately be regarded as suspect. We are surprised that HSBC did what is alleged above, as it would seem that it actually risks a run on the bank if it begins to limit withdrawals, regardless of the pretext. Aside from that, as British MP Douglas Carswell points out:


“All these regulations which have been imposed on banks allow enormous interpretation. It basically infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent.”


HSBC has in the meantime backtracked somewhat, as there were presumably a great many complaints. However, look closely at their reasoning for the measure:


“The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced.”


(emphasis added)

There are two things worth pointing out: 1. the bank doesn't want to 'protect its customers', who we assume are perfectly capable of doing so themselves, provided they are not minors. Rather, it is looking out for number one, i.e., itself – as in the case of fraud, banks are usually liable. 2. there is the unstated insinuation that the use of cash is automatically a reason to suspect 'financial crime' and therefore needs to be questioned. There is a drive all over the world to 'phase out cash' – in Sweden it has progressed the furthest so far. The reasons for this are to protect the fractionally reserved banks from withdrawals and bank runs as well as to increase their fee-skimming possibilities, and secondly (and probably more importantly) to exert more control over the citizenry by destroying what little is left these days of financial privacy. This is usually done by smearing cash as a form of money only criminals would use. The fact that many people increasingly use 'plastic money' for convenience is entirely beside the point, as that is a voluntary activity. The point is that it must be possible to say no to the banking system and stay outside of it. If that is no longer possible, one cannot possibly regard oneself as free.





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3 Responses to “When the Bank Becomes Your Parent …”

  • In this day of massive QE, this would be an indication the bank has problems. Reserve requirements are so infinitesimal that a bank that short on cash is probably over-extended. If I recall correctly, HSBC is a Hong Kong outfit.

    Reason number 1 is the reason they want you to use debit cards and the whole 9 yards. Plus the cards earn fees. Take away cash and the banking system can draw interest on absolutely nothing. No one ever need mark to market as a bank and the only way a bank would ever fail would be if the other banks asked to see their hole cards. Thus they would never really have to pay their debts. It would be perpetual Egypt for all people who didn’t participate equally in the ownership of a bank. Thus we are headed for perpetual bondage.

    It is not surprising that Sweden would be at the forefront in doing away with cash. The only outfit more desiring to cover up insolvency than the banking system is a socialist government. Hopefully the hackers of the world will destroy the widespread use of electronic money.

  • No6:

    Is it any wonder Bitcoin is looking more attractive by the day. shame it is not backed by real money.

  • Crysangle:

    Real world DDOS – becoming more and more common in social management now that government structure and ability is more widely questioned . I suppose it frames destinction where there was none worth mentioning before .

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