Banks are NOT closing current accounts over political views, says FCA
- Financial regulator says no customer is “unbanked” for personal opinions
- Instead, fraud and poor customer behavior are the main reasons for closures.
Banks have not closed any current accounts due to customers’ political opinions, the financial regulator said today, despite a fierce political storm over the issue.
Earlier this year, the issue of bank account closures, known as “debanking”, hit the headlines when former UKIP leader Nigel Farage claimed Coutts closed his current account because of his right-wing views.
In response, the Government asked regulator the Financial Conduct Authority (FCA) to intervene and investigate.
Today the FCA published a report saying it had found no evidence that 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.
We’re back for the second time – the FCA is carrying out a second review specifically in the case of the closure of Nigel Farage’s Coutts bank account
The FCA questioned 34 banks about how many current accounts they closed and why.
However, the regulator also said its report was rushed and that data provided by banks was confusing and incomplete.
FCA chief executive Nikhil Rathi said: “No bank, building society or payments company informed us that they had closed accounts primarily because of someone’s political views.”
Banks told the FCA that up to 6.7 per cent of current account applications were rejected.
Around 2.3 per cent of current accounts are suspended, while around 3.4 per cent were closed in the period analyzed by the FCA, from July 2022 to June 2023.
However, these numbers are much worse for basic bank accounts – the simple accounts available to people who don’t qualify for (or don’t want) a full checking account.
Of this group, up to 35.7 percent of applications were rejected, 1.8 percent were suspended and another 1.8 percent closed during the period.
The FCA today announced plans to further investigate why banks are rejecting so many basic bank account applications.
When can you close a bank account?
By far the most common reasons providers gave for rejecting, suspending or closing an account were because it was dormant or inactive, or because there were concerns about financial crime.
The FCA’s Rathi said: “Although no bank, building society or payments company informed us that they had closed accounts primarily because of someone’s political views, more work needs to be done to be safe.”
‘As we undertake that work, the time is also right for a debate on how to balance access to bank accounts with the threat of financial crime, as well as the reasonable risk and commercial appetite of companies.
‘An important question for policymakers is whether all individuals, companies and organizations should be entitled to an account, as is the case in some other countries.
“What’s more, international comparisons suggest that strong digital identities could play an important role not only in combating financial crime but also in helping financial inclusion.”
What’s next with the unbanked Nigel Farage fury?
The FCA said it will continue to work in the coming months with “atypical” firms, particularly with high rates of failed accounts, to verify data and better understand the reasons behind, for example, account closures 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 that politicians have been ‘unbanked’ for their political views. This new report is a cover-up and a hoax. If we don’t have a regulator that is fit for purpose, what hope is there for our banking industry? ?,” Farage posted on social media platform X.
While an account cannot be closed due to legitimate political opinions, the FCA said the government and lawmakers should consider whether individuals and businesses should have a legal right to an account, as is the case in countries such as Belgium and France.