The Financial Conduct Authority (FCA) in the United Kingdom has stated that there is currently no substantial evidence to suggest that British banks are closing accounts based on individuals' political beliefs. In a report released on Tuesday, the FCA indicated that while a more detailed investigation is necessary, the available data does not support the claim that political views are the primary reason for account closures.
This investigation was initiated by British Finance Minister Jeremy Hunt, who had expressed concerns over the termination of bank accounts and proposed potential fines for banks found in violation of the law. The issue gained prominence after Nigel Farage, former leader of the Brexit Party, asserted that his account at Coutts, a private bank under NatWest, was closed due to his political views. Subsequently, internal bank documents emerged, revealing that the decision was influenced in part by his political beliefs, alongside commercial considerations. This controversy ultimately led to the unexpected departures of NatWest CEO Alison Rose and Coutts CEO Peter Flavel.
The FCA's inquiry encompassed data from 34 banks and building societies, focusing on the period from July 2022 to June 2023. However, the rapid nature of the investigation meant that there were certain gaps, limitations, and inconsistencies in the information provided. Consequently, the FCA was unable to present a definitive initial set of findings regarding the groups most affected by account declines, suspensions, or terminations.
The FCA's report indicated that the most common reasons cited by banks for declining, suspending, or terminating accounts were inactivity or concerns related to financial crime, rather than individuals' political beliefs. The FCA plans to conduct further investigations in the coming months, with a particular focus on banks exhibiting high rates of account declines. This effort aims to verify data and gain a deeper understanding of the reasons behind account closures linked to reputational risks.
In response to the FCA's initial findings, Andrew Griffith, Britain's financial services minister, emphasized the importance of free speech as a fundamental human right. He noted that while progress had been made, further validation of bank submissions and a comprehensive review of the perspectives of de-banked customers were necessary.
Nigel Farage, however, dismissed the FCA's findings, describing them as a "whitewash" and a "joke." He questioned the effectiveness of the banking industry regulator and raised concerns about its suitability.
While it was confirmed that bank accounts cannot be legally closed solely due to individuals' lawfully held political views, the FCA suggested that the government and lawmakers consider whether people and businesses should be granted a legal right to maintain a bank account, as is the case in some other countries, including Belgium and France.
In a separate initiative, the FCA is conducting a review of how banks conduct mandatory additional checks on "politically exposed" customers and their families to mitigate money laundering risks. A report on this matter is expected by the end of June 2024.
By fLEXI tEAM