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- The Financial Conduct Authority has said there is no compelling evidence of de-banking
- This is despite several cases where bank accounts were mysteriously closed.
- The regulator said the reason could be a lack of uniformity in record keeping by some banks.
According to the Financial Conduct Authority, consumers have not been unfairly debanked, but it admitted the truth is obscured by a lack of accurate banking records.
The debanking scandal broke last year when several people felt their bank accounts were unfairly closed because of their political beliefs.
Others, including charities, appeared to have been debanked for no apparent reason, as revealed by This is Money.
The FCA investigated the matter and said in September 2023 that it had found no evidence that anyone had lost their bank account due to their political opinion or legitimate views.
But now the regulator has published a second report on the issue.
Banking crisis: Private bank Coutts was at the centre of a row over debanking in 2023 with reformist MP Nigel Farage, leading to the resignation of the boss of Coutts’ parent company NatWest Group.
While this confirmed the FCA’s previous findings that it found no evidence of unfair de-banking, the regulator revealed it could not say so with 100 per cent certainty.
This is because banks often have incomplete records of why they close bank accounts, the FCA said.
For example, some banks simply list the reason for closing or denying a bank account as “other” and do not give a specific reason.
The FCA report noted: ‘Many firms identified discrepancies in their data regarding the reasons for their account denials and terminations following a manual review, with some firms using a broad ‘other’ justification for large proportions of account denial/termination cases.
“We have not found evidence that political beliefs or other legally expressed opinions have been used as a justification for denying, suspending, or terminating an account. Our conclusion on this point has not changed from the 2023 report.”
The FCA added that “this conclusion remains based on the evidence we have seen and is mindful of the limitations of data and record keeping outlined above.”
The regulator also investigated cases where charities and other organisations were debanked or had difficulty obtaining a bank account, in a victory for This is Money.
The regulator said: ‘The FCA report also highlighted problems other organisations have experienced when accessing accounts, including pawnbrokers, charities and in the adult entertainment sector.
“It has set an expectation that firms have a clear and well-thought-out definition of reputational risk. However, it has a limited mandate to act on behalf of commercial clients and charities.”
The regulator also encouraged banks to do more to support those who want a bank account but do not have one.
One particular area the FCA wants banks to improve on is promoting basic bank accounts, which offer a no-frills current account.
These loans are typically taken out by people who do not qualify for other bank accounts, for example due to poor credit history, and they generally do not have overdraft or loan options.
The regulator said many consumers are unaware of basic bank accounts and some banks do not mention them on their websites.
The FCA wants banks to ensure they do not deny people these bank accounts without a good reason, such as not being able to provide certain forms of identification.
Sheldon Mills, the FCA’s executive director for consumer and competition, said: “We’ve seen examples of very good practice – with account providers helping people access a product vital to financial inclusion – but also areas where there is room for improvement.
By sharing both, we hope to achieve more consistent results, with people aware of which accounts might be suitable for them, more support for the vulnerable, and people not being denied access without good reason.
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