This week challenger bank N26 have announced that they’re closing their doors in the UK and taking customer’s bank accounts with them: from 15 April, all of their 200,000 or so customers will have their accounts shut down.
Whether you’re affected by this shutdown or simply curious about what would happen if your own bank came into difficulty, we’ve pulled together the facts and taken a look at what customers needs to do next.
What happened?
N26 is one of the smallest banking companies in the country, and unlike major challenger banks like Monzo, Revolut and Starling they hadn’t actually secured a UK banking licence. Instead, they have been operating using a European licence. Now with Brexit underway they have stated that it is not possible for them to continue offering accounts in the UK.
Is my money safe?
If you have an account with N26, then you need to transfer all of your money into another account. You have until 15 April, but the sooner you can get sorted the better for your peace of mind. If you have a second account already then move your money across. If not, you’ll need to set one up; many N26 customers are looking at other challenger banks for an easy, travel friendly alternative.
Banks like Monzo are far better established in the UK than N26, so while we’d never say never, they’re unlikely to face similar issues any time soon. Worst case scenario, if you don’t set up a new account in time then withdraw your money as cash.
Current customers will also need to switch any direct debits or standing orders to another account. Since N26 isn’t part of the switch service, you’ll need to do this manually. You’ll need to give the payee the details of the new account that you want to pay them from. Finally, overdrawn customers should aim to pay back their overdraft before their account closes.
Could this happen to others?
The circumstances surrounding N26’s closure are quite unusual, and we don’t see anything to suggest that other banks are going to be affected by similar issues. If you’re banking with one of the UK’s more established organisations then it’s quite unlikely that your bank will go bust or shut its doors any time soon.
This isn’t the only reason your account could be closed though, and it’s important to be aware that banks are not under any obligation to keep you as a customer. If they’re concerned about your financial activity – and particularly if they think there might be a risk of fraud, whether or not you’ve done anything to warrant it – then your bank may well close your account down. If that were to happen, you’d need to follow the same steps outlined here: move your money and switch any automated payments.
Luckily, that kind of account closure is rare. For most people, the news that N26 is closing down shouldn’t be cause for concern. It certainly doesn’t mean that your bank is at risk, even if you use one of the other, better known challenger banks.