But Questions Still Linger
London: In a decisive move, the Financial Conduct Authority (FCA) quashed speculation surrounding the closure of bank accounts based on political views in the UK. Despite initial concerns, the watchdog’s Tuesday announcement revealed a lack of substantial evidence supporting the notion that banks were terminating accounts due to individuals’ political affiliations. However, the FCA underscored the need for a deeper dive into the matter, citing the swift nature of its preliminary inquiries.
The controversy erupted when British Finance Minister Jeremy Hunt urgently called on the FCA in August to probe the abrupt terminations of bank accounts, proposing potential fines for institutions found culpable of breaking the law.
The focal point of the political storm was the practice dubbed “debanking,” thrust into the spotlight by former Brexit Party leader Nigel Farage. Farage claimed that his account at the prestigious private bank Coutts, a part of the NatWest conglomerate, was closed solely due to his political beliefs. An internal bank document later surfaced, suggesting that the decision was influenced by Farage’s views, coupled with commercial considerations. The ensuing fallout resulted in the unexpected departures of NatWest CEO Alison Rose and Coutts CEO Peter Flavel.
The FCA’s scrutiny encompassed data from 34 banks and building societies, with a time frame spanning July 2022 to June 2023. Despite the rapid pace of inquiries, the FCA acknowledged gaps, limitations, and inconsistencies in the information received. The regulatory body refrained from presenting a definitive initial set of findings on the groups potentially impacted by account closures, suspensions, or terminations.
The FCA’s report stated, “Consequently, the information we have received so far does not suggest that account holders’ legitimately expressed political opinions or beliefs have resulted in account closures.” Instead, it highlighted that the most prevalent reasons cited by providers for account-related actions were inactivity/dormancy or concerns related to financial crime.
Anticipating ongoing scepticism, the FCA announced plans for further investigation in collaboration with “outlier” firms, specifically those displaying elevated rates of declined accounts. This additional inquiry aims to validate data and gain deeper insights into the rationales behind account closures, including factors like reputational risk.
Britain’s financial services minister, Andrew Griffith, echoed the importance of free speech as a fundamental human right. While acknowledging the FCA’s initial report, he emphasized, “Clearly there is more to be done to validate the submissions by banks and to ensure that the FCA have thoroughly followed up debanked customer perspectives.”
In a separate but related development, an independent review commissioned by NatWest is targeting Nigel Farage. The former Brexit Party leader dismissed the FCA’s findings, declaring, “The FCA says it finds no evidence of politicians being ‘debanked’ over political views. This new report is a whitewash and a joke.” Farage’s skepticism extended to questioning the regulatory body’s fitness for purpose in overseeing the banking industry.
While affirming that an account cannot be closed based on lawfully held political views, the FCA urged government and legislators to contemplate the possibility of granting people and businesses a legal right to an account, drawing parallels with systems in countries such as Belgium and France.
In a parallel initiative, the FCA is delving into how banks conduct mandatory additional checks on “politically exposed” customers and their families to mitigate money laundering risks. A comprehensive report on this matter is slated for release by the end of June 2024.
