February 21, 2024

UK banks are closing more than 1,000 accounts every day | Banking

Banks are closing more than 1,000 accounts every working day, according to new data that has fuelled the growing row over so-called “debanking” and prompted Nigel Farage to call for a royal commission to investigate what he said was a scandal.

Hours after the former Ukip leader revealed he was spearheading a website to campaign on behalf of people whose accounts had been shut, data revealed a big jump in the numbers of customers dumped by their bank.

The figures, obtained through a freedom of information (FoI) request made to City watchdog the Financial Conduct Authority and first reported in the Mail on Sunday, revealed that in 2016-17, just over 45,000 accounts were shut by banks. The total has increased every year since, climbing to just over 343,000 accounts in 2021-22 – representing well over 1,000 for every business day of the week.

When people or organisations have their bank accounts closed, they often receive little or no explanation as to why this has happened, though the banks sometimes say it is due to concerns over financial crime such as money laundering and fraud.

Farage used a subject access request to discover that, despite initial denials by NatWest subsidiary Coutts, his political views had played a part in the closure of his account.

There has already been a huge fallout from Farage’s case. Dame Alison Rose, the chief executive of NatWest Group, eventually stood down after the row after she revealed she had been the source of a BBC story claiming that Farage’s account had been closed for commercial reasons.

She was soon followed out of the door by Peter Flavel, chief executive of Coutts. Farage also wants NatWest Group’s chair, Sir Howard Davies, to stand aside.

The new data will heap further pressure on NatWest, Coutts and the banks in general to explain what has been happening.

Speaking to the media on Sunday, Farage said he would be happy to have a royal commission set up to examine the problem, “provided it happened quickly”. Other rightwingers have rallied around him, adding weight to his call to hold the banks to account.

“I’ve just been inundated by small businesses, by folk all round the country. People in absolute fear, terror, lives being ruined, thousands of businesses being closed. These are people who have done nothing wrong whatsoever,” he told GB News, where he works as a presenter.

It is estimated that almost 90,000 individuals have been categorised as “politically exposed persons”, leading to some politicians or their families being turned down by banks. These include some MPs and other figures deemed to potentially be at risk of abusing their positions for private gain.

On Friday the anti-Brexit campaigner Gina Miller called on the FCA and government to step in to ensure new parties and MPs can access banking services. This came after digital bank Monzo informed her recently that her True and Fair party’s account would close in September.

At the other end of the spectrum, pro-Brexit groups have reported similar problems.

Over the weekend the energy secretary Grant Shapps revealed that he and his family had been victims of debanking because he is a politically exposed person. Shapps reportedly said that one bank had demanded 18 years’ worth of payslips before it would let him be a customer.

Most of those who have been affected by these issues are not in the political spotlight, but are ordinary people trying to go about their lives or run businesses.

Some seemingly found themselves debanked because they held perfectly legal cryptocurrency or gambling accounts. Others who were not born in the UK have found their accounts shut down, often after making or receiving payments from abroad.

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A few weeks before the Farage story broke, the Guardian revealed how a retired social worker who had spent the past year doing humanitarian work across Ukraine had her account suddenly shut by Lloyds.

Fiona Hancock was left with no access to her £5,000 balance made up of savings and pension payments. Without explanation, Lloyds sent a cheque for her balance to her UK address, which was housing Ukrainian refugees.

Until now the banks have often hidden behind money-laundering regulations to refuse to say why an account has been closed.

Commenting on the data, the FCA said increased monitoring by banks might explain some of the increase in account closures. There are about 75m accounts in the UK.

It said: “We know that the total number of customers that banks have ceased doing business with for financial crime reasons is less than 0.2%. Tackling financial crime remains a priority of the FCA. We have seen firms increase their monitoring of accounts over the past couple of years, which may account for the increase in the figures,” it said.

The government has announced plans to change the rules around bank account closures – including a requirement to give longer notice of an impending shutdown.

“In some cases banks are legally prevented from telling customers why an account has been closed,” said Tina McKenzie, policy chairman of the Federation of Small Businesses.

“But where possible, they should be told, so that if there has been a misinterpretation or misunderstanding, it can be swiftly resolved.”

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