The UK’s financial regulator has found no evidence that banks have shut down or denied accounts to customers based on their political beliefs, according to a preliminary review launched in the wake of the Nigel Farage debanking row.
Its initial assessment has been met with a furious backlash, notably by the former UKIP leader, prompting the financial regulator to promise further investigation to be done into the widespread bank account closures, the so-called de-banking debate which was reported on by TechRound back in February.
The De-Banking Row
On Tuesday, the Financial Conduct Authority (FCA) said that none of the 34 banks, building societies, and payment companies it examined had closed any account “primarily because of a customer’s political views” in the 12 months leading up to June 2023.
Instead, it said that concerns about financial crime and dormant accounts were the main reasons for closures.
The watchdog was promoted to investigate the last 12 months up to June in the wake of the de-banking row that recently engulfed NatWest Group in relation to its handling of an account belonging to former UKIP leader Mr Farage in its Coutts arm.
After Mr Farage publicly broke the news that his account with the private bank had been shut, he obtained a 40-page dossier suggesting this closure was partly due to his views not aligning with its “values”, including his friendship with former US president Donald Trump and LGBTQ+ rights.
His allegations caused Coutts boss Peter Flavel to resign and cost the chief executive of NatWest Dame Alison Rose her job after her admittance to being the source behind an incorrect BBC story about the de-banking row.
Mr Farage’s allegations against Coutts put him at the forefront of the already growing concerns that customers of banking services have been quietly discriminated against because of their political views.
While banks do have the freedom to choose who they do business with and can refuse individuals who, for example, may be under sanctions in the UK or abroad, the FCA said “we want to assure ourselves that this criteria is not being interpreted too broadly.”
While the City regulator did say that payment companies – rather than banks or building societies – accounted for the majority of cases where accounts were denied on the basis of reputational risk, it failed to give anything resembling a satisfying explanation for why over a million adults in the UK have been denied a bank account, blatantly ignoring the widespread evidence for political prejudice in our financial institutions.
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‘a whitewash and a joke’
The findings of the FCA have been met with a furious response, notably from Mr Farage who claims the watchdog is part of the problem.
“The FCA says it finds no evidence of politicians being ‘de-banked’ over political views. This new report is a whitewash and a joke,” Mr Farage wrote on X, formerly known as Twitter.
“The ball I think is firmly back in the court of the government, Andrew Griffith and Jeremy Hunt, this isn’t good enough…We need sackings of the (FCA) board,” Farage continued.
After this initial backlash, the FCA has added that it plans to work further with banks, building societies and payment companies to verify the data they supplied and better understand why and when these accounts were closed.
The FCA is also looking into whether politically exposed persons (PEPs) – including MPs, peers, leaders of UK political parties and senior-ranking military officers – are unjustly being denied banking services. Banks are required to closely monitor the accounts of PEPs as they’re considered to be at a higher risk of bribery and corruption.
Evidently, the FCA still has a lot of work to do within its investigations into the de-banking row. After all, the issue has already snowballed into a debate surrounding free speech, and allegations of political prejudice in banks should certainly not be quelled by such an inadequate initial examination.
As worded by one government insider: “The whole thing is a s*** show. This is a very limited piece of work that has ended up upsetting everyone. The banks were never going to incriminate themselves by saying they had de-banked someone for political reasons”
In its lengthy report, the FCA itself reportedly stressed that data had been gathered “at speed” and that there were significant gaps. The investigation only began in August after Farage ignited the national de-banking debate with his claims against Coutts.
Denial of a Fundamental Right: ‘No ifs, no buts’
It’s unsurprising that the findings of the FCA have been met with outrage, particularly from Mr Farage after the City regulator admitted that it didn’t even look at the one-time UKIP leader’s allegations against Coutts.
Exclusion of Farage’s battle with the private bank was done on the grounds that Coutts never actually followed through with the closure, as Farage said in July that Coutts’s new boss had offered to retain his account.
Still, one wonders what the nature of the FCA’s investigation could possibly have been to miss the extensive evidence of people being de-banked for political reasons.
As summed up so eloquently by Mr Farage, the FCA’s findings beg one question that leaves a bad taste in the mouth: “If we don’t have a regulator that is fit for purpose, what hope is there for our banking industry?”
After all, no less than 1.1 million UK adults have been left without a bank account.
The FCA promises that it will continue examinations into why this is, with the regulator’s chief executive Nikhil Rathi stating: “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 policymakers is whether all individuals, businesses and organisations should have the right to an account, as is the case in some other countries.”
Though Mr Rathi promises that “further work” is needed for the FCA to validate the de-banking row, his words can’t help but fall flat after his own admittance that the FCA’s investigation involved banking societies reporting to the watchdog on why they had closed accounts. After all, what bank will openly incriminate themselves as being politically prejudiced?
In response to the FCA’s report Andrew Griffith, economic secretary to the Treasury, said: “Free speech is a fundamental human right. No ifs, no buts – everyone must be able to express their lawful opinions without fear of losing the vital access to a bank account.
“We have already acted to force banks to explain and delay any decision to close an account to protect freedom of expression – meaning customers will have a 90-day notice period and a clear explanation for any account closure.
“That will be backed up in legislation this year.
“We note the initial report of the FCA. Clearly, there is more to be done to validate the submissions by banks and to ensure that the FCA has thoroughly followed up de-banked customer perspectives.”
More work to be done indeed. Particularly after the FCA found that 35.7 per cent of basic bank accounts – designed to ensure everyone has a minimum level of access to financial services were declined. A seriously worrying figure that the UK public deserves a far more scrupulous answer for, both from the City regulator and from the government.