The city regulator has said it has contacted the owner of Coutts bank amid a growing dispute over its decision to close Nigel Farage’s accounts, but told lawmakers that while lenders cannot discriminate against customers, it is ultimately up to companies to decide whom to do business with.
It came as the prime minister, home secretary and city minister waded into the growing debate over the rights of lenders to close or reject accounts based on concerns about clients’ political views.
Coutts, an exclusive private lender that caters to royalty and the world’s super-rich, ended its relationship with Farage earlier this year. On Tuesday, the Brexit campaigner and former leader of the UK Independence Party released internal documents obtained from the bank, which indicated that he was concerned about his “xenophobic, chauvinistic and racist views” and believed that keeping his accounts posed a risk. for the bank’s reputation.
The documents highlighted Farage’s ties to controversial politicians such as Donald Trump and his views on issues including migration and Russia, stating that his comments are “not in line with our views or our intent.”
Financial Conduct Authority chief executive Nikhil Rathi told lawmakers on Wednesday that the regulator had spoken with Coutts’ parent company, NatWest Group, and UK regulations, inherited from the EU, prohibit banks from discriminating against customers based on protected characteristics such as race and gender.
Speaking at a hearing of the parliament’s Treasury select committee, Rathi said: “You can’t discriminate based on political views either.”
However, FCA chairwoman Ashley Alder suggested that lenders had some discretion with clients: “For banks and other commercial enterprises, it is fundamentally up to them to choose who they do business with.”
In a series of interventions, Conservative ministers and MPs joined the controversy, with Rishi Sunak being pressured by Jacob Rees-Mogg to open a public inquiry during Prime Minister’s Questions.
The British state still holds a 38.6% stake in the NatWest Group, which owns lender NatWest, having bailed it out during the financial crisis.
Speaking during a press conference in Warwick, Sunak said: “It is not right for anyone to be denied financial services because they are exercising their legitimate right to freedom of expression. That is why the government passed laws which are being consulted and which ensure that banks treat so-called ‘politically exposed persons’ in a proportionate manner”.
The Treasury is reportedly considering increasing the notice period before banks close accounts from 30 days to three months after the dispute, according to Sky News.
In a Twitter post, Home Secretary Suella Braverman accused NatWest Group of “politically biased dogma,” claiming that “the Coutts scandal exposes the sinister nature of much of the industry’s diversity, equity, and inclusion,” while the city’s minister, Andrew Griffith, said in a tweet that financial services should not be denied to those “exercising their right to legal free speech.”
“The privilege of a banking license in a democracy should come with a duty not to ‘unbank’ because you disagree with someone’s views,” Griffith said.
Farage has criticized Coutts for weeks, originally claiming that his decision to close his account was related to the fact that he was categorized as a politically exposed person (PEP), who would be subject to additional financial crime checks. He also said that this was the reason nine other lenders had denied him services while he was trying to change his cash.
Farage had maintained personal and business accounts for his media work company, Thorn in the Side Ltd, with Coutts.
A Farage spokesman declined to say whether he would accept an offer to become a NatWest client.
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The bank ultimately decided to cut ties with the former politician once his mortgage expired earlier this year. Without a mortgage, Farage fell below the bank’s financial threshold, which requires its clients to have at least £3m in savings, or borrow or invest at least £1m in the bank. It was previously reported that this was the reason why the bank had removed him as a customer.
“The relationship has been below commercial criteria for some time and following review of Nigel’s public profile and past connections, perceived risks to the future outweighed the benefit of retention, the decision was made to exit after paying off an existing mortgage,” Coutts’ internal report, published by the Telegraph and Daily Mail, states.
Everyone in the UK is entitled to a basic bank account, which offers the ability to receive and make payments. However, UK banks, like most businesses, are free to deny additional services to customers if they pose a reputational risk.
It’s considered a business decision, but it’s still subject to fair treatment and equality concerns, which means people can’t be denied on the basis of protected characteristics like gender or race.
FCA’s Rathi explained to MPs that it would now be up to Farage to lodge a complaint with the Financial Ombudsman Service (FOS), which would take into account both the ex-politician’s concerns and the bank’s logic.
Farage’s spokesman did not immediately confirm whether he had filed a formal complaint.
A Coutts spokesman said the bank could not comment on the case in detail due to client confidentiality rules. “However, it is not Coutts’ policy to close client accounts solely on the basis of legally held personal and political views. Decisions to close an account are not made lightly and involve a number of factors including business viability, reputational considerations, and legal and regulatory requirements.
“We recognize the critical importance of access to banking. When it became clear that our client could not obtain banking services elsewhere, and as publicly confirmed, alternative banking services were offered with NatWest. That offer is maintained,” the bank added.
“We understand the public concern that the processes for terminating a customer relationship and how they are communicated are not transparent enough. We welcome HM Treasury’s advance recommendations in this area, along with the request to prioritize the review of regulatory standards related to politically exposed persons.
“We look forward to working with the government, the regulator and the broader industry to ensure that universal access to banking is maintained,” Coutts said.