Banks AREN’T closing current accounts for political views, FCA says
- The financial regulator says no customers are ‘debanked’ for personal views
- Instead, fraud and poor customer behaviour are the main reasons for closures
Banks have not closed any current accounts over customers’ political views, the financial regulator said today – despite a fierce political firestorm around the issue.
Earlier this year the issue of banks closing accounts, known as ‘debanking’, hit the headlines when former UKIP leader Nigel Farage claimed Coutts shut his current account due to his right-wing views.
In response, the Government asked the Financial Conduct Authority (FCA) regulator to step in and investigate.
Today the FCA published a report saying it had found no evidence any bank had closed a current account due to political views.
Instead, the FCA said banks were only closing accounts for reasons such as suspected fraud and abuse of bank staff.
Back for seconds: The FCA is carrying out a second review specifically into the case of Nigel Farage’s Coutts bank account being closed
The FCA quizzed 34 banks about how many current accounts they closed, and why.
However, the regulator also said its report was rushed, and that the data supplied by banks was messy and incomplete.
FCA chief executive Nikhil Rathi claimed ‘no bank, building society or payment firm reported to us that they had closed accounts primarily due to someone’s political views’.
Banks told the FCA that up to 6.7 per cent of current account applications were denied.
Around 2.3 per cent of current accounts get suspended, while around 3.4 per cent were shut in the period the FCA looked at, July 2022 until June 2023.
However, these figures are far worse for basic bank accounts – the no-frills accounts available for people who do not qualify for – or want – a full current account.
Of this group, up to 35.7 per cent of applications were rejected, 1.8 per cent were suspended and another 1.8 per cent shut during the period.
The FCA today announced plans to do more investigation into why so many basic bank account applications are shot down by banks.
When can a bank account be closed?
By far the most common reasons providers gave for refusing, suspending or closing an account were because it was inactive or dormant, or because there were concerns about financial crime.
The FCA’s Rathi said: ‘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.
‘As we undertake that work, the time is also right for a debate on how we balance access to bank accounts with the threat of financial crime, as well as firms’ reasonable risk and commercial appetites.
‘An important question for policy makers is whether all individuals, businesses and organisations should have the right to an account, as is the case in some other countries.
‘What’s more, international comparisons suggest robust digital identities could play an important role not only in countering financial crime but also in aiding financial inclusion.’
What’s next with the Nigel Farage debanking furore?
The FCA said it will be doing further work over coming months with ‘outlier’ firms, in particular with high rates of declining accounts, to verify the data and to better understand the reasons behind, for example, the closure of accounts due to reputational risk.
An independent review is already looking specifically at the case of Farage, who today dismissed the FCA’s findings.
“The FCA says it finds no evidence of politicians being `debanked´ over political views. This new report is a whitewash and a joke. If we don’t have a regulator that is fit for purpose, what hope is there for our banking industry?,” Farage posted on X social media platform.
While an account cannot be closed due to lawfully held political views, the FCA said government and lawmakers should consider whether people and businesses should be given a legal right to an account, as is the case in countries like Belgium and France.
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