Banks are NOT closing current accounts for political reasons, says the FCA
- The financial regulator says no customer will be “deprived of bank fees” because of personal views
- Instead, fraud and poor customer behavior are the main reasons for closures
Banks have not closed checking accounts because of their customers’ political views, the financial regulator said today – despite intense political unrest surrounding the issue.
Earlier this year, the issue of bank account closures, known as “debanking”, hit the headlines when former UKIP leader Nigel Farage claimed that Coutts had closed his current account because of his right-wing views.
In response, the government called on the Financial Conduct Authority (FCA) regulator to intervene and investigate.
Today the FCA published a report saying it had found no evidence that a bank had closed a current account because of political views.
Instead, the FCA said banks would only close 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 the closure of Nigel Farage’s Coutts bank account
The FCA surveyed 34 banks about how many current accounts they had closed and why.
However, the regulator also said its report was rushed and that the data provided by banks was confusing and incomplete.
Nikhil Rathi, chief executive of the FCA, claimed: “No bank, building society or payments company has reported to us that they closed accounts primarily because of an individual’s political views.”
Banks told the FCA that up to 6.7 percent of current account applications were rejected.
Around 2.3 percent of current accounts are blocked, while around 3.4 percent were closed in the period from July 2022 to June 2023 examined by the FCA.
However, these numbers are far worse for basic bank accounts – the no-frills accounts available to people who don’t qualify for or want a full-fledged checking account.
Of this group, up to 35.7 percent of applications were rejected, 1.8 percent were suspended and a further 1.8 percent were closed during this period.
The FCA today announced plans to carry out further research into why so many simple bank account applications are being rejected by banks.
When can a bank account be closed?
By far the most common reasons for an account being declined, blocked or closed were that the account was inactive or dormant or that there were concerns about financial crime.
The FCA’s Rathi said: “While no bank, building society or payments company has reported to us that they have closed accounts primarily because of an individual’s political views, further work is needed to be sure.”
“As we undertake this work, the time is also ripe for a debate about how we can balance access to bank accounts with the threat of financial crime and the appropriate risk and commercial interests of companies.”
“An important question for policymakers is whether all individuals, companies and organizations should have the right to an account, as is the case in some other countries.”
“In addition, international comparisons suggest that robust digital identities could play an important role not only in combating financial crime, but also in promoting financial inclusion.”
What happens next with Nigel Farage’s debanking turmoil?
The FCA said it would carry out further work with “outlier” firms in the coming months, particularly with high rates of declining accounts, to review the data and better understand the reasons for accounts being closed due to reputational risk, for example.
An independent review is already looking specifically at Farage’s case, which today rejected the FCA’s findings.
“The FCA says it finds no evidence of politicians being “excused” because of 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 the social media platform X.
While an account cannot be closed because of lawful political views, the FCA said the government and lawmakers should consider whether people and companies should be given legal right to an account, as is the case in countries such as Belgium and France.