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Banks told to divulge account closure details

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
11/08/2023

The city watchdog has asked the biggest banks and building societies to provide information on account closures following the Farage furore in recent weeks.

The regulator, the Financial Conduct Authority (FCA) has sent banking giants an information request seeking further details about account closures for both personal and business customers.

Between 1 January 2022 through to 30 June 2023, the FCA wants to know:

  • The number of customers who have been terminated or suspended
  • The number of customers denied services
  • The reasons for all of the above
  • The number of complaints banks have received on this issue.

It also wants to know if accounts have been closed because of ‘expressions of political or other opinions’, including for Politically Exposed Persons (PEPs).

Financial firms now have until 25 August to supply the information.

Farage bank account closure

It comes amid the banking scandal of recent weeks where it was inaccurately reported in the BBC that ex-UKIP party leader and Brexit campaigner Nigel Farage was ditched by Coutts – part of the NatWest Group – for not being ‘wealthy enough’.

It was later revealed that his account was closed due to his political ideology. Later NatWest CEO Alison Rose disclosed she was the source behind the inaccurate comments.

Alison Rose stepped down last month as concerns were raised over her “breach of customer confidentiality”. It also highlighted the need to protect lawful freedom of expression for customers accessing banking services.

Bank account closures on the rise

Following this, a Mail on Sunday investigation suggested a million bank accounts had been closed in the past four years.

Further, banks were found to wrongly close customers’ accounts in more than three in 10 cases referred to the Financial Ombudsman Service (FOS).

The FCA said it will analyse the results and provide an initial assessment by mid-September.

In the letter to banks and building societies, the FCA wrote: “In recent years, we have seen a significant increase in the number of bank accounts being closed. This may reflect increased monitoring by firms to tackle financial crime, including fraud.

“However, it is less clear the extent to which banks may be terminating accounts for other reasons, which may be unjustified.

“In addition, we are aware that there are individuals and certain types of businesses that remain underserved by banks where they find it difficult to open payment accounts.”

It added: “As the regulator, it is important that we understand the scale of the issue and the drivers behind them.”