It is legitimate to wonder whether a bank has the right to close a bank account and, if so, under what conditions, particularly regarding the notice period. The relationship between a bank and its customer is built on trust. A bank account is a contract, and for a demand deposit account of indefinite duration, due to the principle prohibiting perpetual commitments, the banker has the right to terminate this contract. However, this right is regulated, and the requirement for notice depends on the account’s status: whether it is active or inactive, and whether it was opened under the “right to a bank account” procedure.
Closure of an Active Account at the Bank’s Initiative
An account is considered active when you carry out transactions on it or on another account held at the same bank. Even a rarely used account remains active if another account at the same bank is active. A deceased person’s account is also considered active if an heir carries out transactions within the year following the death.
In the case of an active account operating normally, the bank may decide to close it. This decision must comply with the terms of the account agreement. In principle, the bank is not required to justify its decision to close the account, unless the account was opened pursuant to the right to a bank account procedure.
If the bank decides to close an active account, it is generally required to inform you in writing. It must observe a minimum notice period of 2 months before the effective closure of the account (art. L 312-1-1, V du code monetaire et financier). This period is intended to allow you to open another account and arrange the continuity of your financial transactions. The notice must be communicated to you in writing. For standard indefinite-term accounts, this notice period of at least two months is provided for by article L. 312-1-1, V, alinea 3, du Code monetaire et financier.
This legal framework allows certain credit institutions to quietly part ways with customers whose accounts are deemed insufficiently profitable.
Exceptions to the Notice Period for Active Accounts (excluding right to a bank account):
The bank is not required to observe this notice period in certain specific circumstances, notably:
- In cases of seriously reprehensible conduct by the customer. The notion of “seriously reprehensible conduct” is assessed on a case-by-case basis. Examples include refusing to provide explanations regarding suspicious deposits, serious incivilities towards bank staff, or other serious breaches.
- If the customer’s situation is irretrievably compromised.
Special Case of Accounts Opened Under the “Right to a Bank Account”:
When the account was opened under the “right to a bank account” procedure (upon designation by the Banque de France), the bank may only close it without notice in cases exhaustively listed by law (article L. 312-1, IV, du Code monetaire et financier). These cases include:
- The deliberate use of the account for transactions that the bank has reason to suspect are being carried out for illegal purposes. For example, sharing bank details to receive a suspicious transfer may be considered deliberate use for illegal purposes if the bank has serious grounds for suspicion.
- The provision of inaccurate information by the customer.
- Failure to comply with domicile or residence conditions.
- The subsequent opening of a second deposit account in France enabling the use of basic banking services.
- Repeated incivilities towards bank staff.
- The bank’s inability to fulfill its due diligence obligations (as provided for in article L. 561-8 du Code monetaire et financier).
In these specific situations related to the “right to a bank account,” the bank may proceed with closing the account, sometimes without notice, particularly if the customer has used the account for transactions suspected of being illegal. In the event of termination on these grounds, the bank must inform the customer by postal letter and also notify the Banque de France. A statement of reasons for the decision is required, unless doing so would undermine national security or public order objectives.
Closure of an Inactive Account
An account is considered inactive if no transactions have been carried out for a certain period and the holder (or their beneficiaries) has not contacted the bank. The rules differ depending on the type of account:
- Current account: Inactive if, for 1 year, you have not carried out any transaction on this account or on another account at the same bank, and you have not contacted the bank.
- Other accounts (savings, securities accounts, etc.): Inactive if, for 5 years, the same conditions of absence of transactions and contact are met.
- Account of a deceased person: Inactive if, for 1 year after the death, no heir has informed the bank of their intention to assert their rights.
If your account becomes inactive, the bank must inform you (or your representatives/heirs if known) by any means. It must renew this notification 6 months before the closure of the account. The closure of an inactive bank account does not occur automatically and immediately merely as a result of inactivity. The bank must follow the notification procedure. In practice, banking institutions may provide in their general terms and conditions for the possibility of closing an inactive account, but they must then comply with the notification obligations and, where applicable, the notice period provided for contractually or by the applicable regulations.
The bank retains inactive accounts for a certain period before closing them. This period is generally 10 years for current accounts and other accounts, and 3 years for accounts of deceased persons. If the account contains securities, the bank sells them before closure. After this period, the bank transfers the balance (money and proceeds from the sale of securities) to the Caisse des depots et consignations (CDC).
The CDC then holds these funds for a certain period: 20 years for current accounts and other accounts, and 27 years for accounts of deceased persons. If the funds are not claimed by the holder or their heirs within this period, they are permanently acquired by the State. You can search for an inactive account at the CDC and claim the funds where applicable.
Consequences of Account Closure
When the account is closed, its operation ceases permanently.
- If the account is overdrawn: The bank sends you a letter requesting payment of the amount owed.
- If there is money remaining in the account: The bank refunds the amount to you at the time of closure. It provides you with a document called a “final account statement.”
- The bank must honor checks you issued before the closure, provided there are sufficient funds in your account. Insufficient funds will result in payment incidents.
- You must return all payment instruments to your bank in your possession (unused checks, bank card). Withdrawing all the money does not close the account; it merely brings the balance to zero, which may result in inactive account fees if no further transactions are made.
- Standing orders for transfers or direct debits are canceled on the date the termination request is received (for a closure at your initiative). For a closure at the bank’s initiative, the bank will inform you free of charge for 13 months whenever a check, direct debit, or transfer is presented for payment on the closed account.
- The bank reports the account closure to the Banque de France and archives the documents for 5 years.
Fees related to closure: Account closure is free of charge, whether initiated by you or by the bank. However, you must pay for service fees (such as card subscription fees) up to the date of closure. If you have prepaid these fees for a period beyond the closure date, the bank must reimburse the corresponding portion. For inactive accounts, the bank may charge fees and commissions during the retention period before transfer to the CDC, but the amount is capped for certain types of accounts (maximum 30 per year for deposit accounts) and nil for regulated savings.
Customer Remedies in the Event of Closure
If the bank has closed your active account without observing the minimum 2-month notice period, you generally cannot challenge the closure itself. The right to close belongs to the bank.
However, if the bank failed to observe the mandatory notice period (except in the legitimate exceptions mentioned above), you may claim compensation for the harm suffered. Failure to observe the notice period only gives rise to the banker’s liability if the customer demonstrates the existence of actual harm.
If the bank refuses to compensate you, you may bring the matter before the courts.
In summary, the bank may close your account, but it is generally required to observe a two-month notice period for an active account. Exceptions to the notice requirement are strict and relate to serious misconduct, irretrievably compromised situations, or specific conditions applicable to accounts opened under the right to a bank account. The closure of an inactive account follows a different procedure with long retention periods and a notification obligation before the transfer of funds to the CDC. While the closure itself is generally not challengeable, failure to observe the notice period may give rise to a right to compensation.
