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The UK’s top financial regulator has promised further work on bank account closures as a fierce backlash erupted over its initial assessment that politicians were not being denied access to services because of their views.
The Financial Conduct Authority on Tuesday said that none of the 34 banks, payments companies and building societies it examined had closed a single account “primarily because of a customer’s political views” in the 12 months to June 2023. Instead, it found that dormant accounts and concerns about financial crime were the main reasons for closures.
Nigel Farage, the former Ukip leader whose claims that he was “de-banked” over his political views led the government to order the FCA probe, said the finding was “a complete and utter farce, it is a total whitewash, it is a joke”.
City minister Andrew Griffith noted the “initial report” by the regulator but added “clearly there is more to be done to validate the submissions by banks and to ensure that the FCA have thoroughly followed up de-banked customer perspectives”.
In its lengthy report, the FCA repeatedly stressed that data had been gathered “at speed” and that there were significant gaps. The exercise only began in August after Farage ignited a national debate on free speech by claiming he had been ejected from private bank Coutts because of his political views.
Farage published a dossier showing the bank had said that continuing to serve him would not be “compatible with Coutts” since his views were “at odds with our position as an inclusive organisation”.
Coutts ultimately offered to retain Farage as a client and he was still with the bank by the end of July.
“While no bank, building society or payment firm reported to us that they had closed accounts primarily due to someone’s political views, further work is needed for us to be sure,” said Nikhil Rathi, the FCA’s chief executive, on Tuesday.
That work will begin with validating the data the FCA already has and following up with “outliers” that have a higher incidence of rejecting applications or closing certain account types than peers.
A particular area of concern is basic bank accounts — which are designed to ensure that everyone has a minimum level of access to financial services. The FCA found that as many as 35.7 per cent of these accounts were declined and is now asking companies why the figure is so high.
Writing in the Financial Times, Rathi said the FCA also wanted to “understand more about what are described as ‘reputational’ factors behind a number of closures”.
“There are banks who have long declined accounts to businesses that conflict with their company’s policies. But reputational criteria should not be stretched too far,” he wrote.
The FCA did not give a timeframe for completing its follow-up work, nor commit to publishing its outcome.
“The ball I think is firmly back in the court of the government, Andrew Griffith and Jeremy Hunt, this isn’t good enough . . . We need sackings of the (FCA) board,” Farage said, referring to the City minister and the chancellor, in comments on X, formerly known as Twitter.
Government insiders say ministers have been frustrated by the speed with which the FCA initially responded to the de-banking controversy and want the regulator to produce more “granular detail” on the issue.
Griffith said: “Free speech is a fundamental human right. No ifs, no buts — everyone must be able to express their lawful opinions without fear of losing the vital access to a bank account.”
He added: “We have already acted to force banks to explain and delay any decision to close an account to protect freedom of expression — meaning customers will have a 90-day notice period and a clear explanation for any account closure. That will be backed up in legislation this year.”
Sarah Pritchard, the FCA’s executive director of markets, told reporters the regulator had been “very clear that it is unlawful for a customer to lose access to their bank or building society account because of their legally expressed political views”.
Source: Financial Times