What are the UK rules on access to banking and how are disputes resolved?

As the storm grows over the closure of Nigel Farage’s bank accounts at private lender Coutts, here we look at UK rules on the right to be banked and how account holders can complain if they feel they’ve been treated unfairly. .

What rights do I have to a UK bank account?

Under payment account regulations, everyone in the UK is entitled to a basic bank account that offers the ability to receive and make payments.

However, UK banks, like most businesses, can deny customers additional services for a number of reasons, including suspicions of financial crime. Lenders may also choose to close or reject an account if they believe customers pose a reputational risk. This was apparently one of the key reasons why Coutts decided to shut down Nigel Farage’s account.

Farage used a subject access request to obtain internal documents detailing the decision. He showed that the bank was concerned about his “xenophobic, chauvinistic and racist views” and believed that maintaining his accounts posed a reputational risk. The report highlighted Farage’s ties to controversial politicians such as Donald Trump and his views on issues including migration and Russia. He said that some of Farage’s comments were “not in line with our views or our intent.”

It’s important to note that Farage has not been, as he claims, “unbanked.” He has been offered a standard account at Coutts’ sister bank, lead lender NatWest, and has so far refused to confirm whether he plans to take up the offer.

What does this mean to me? Can banks close customer accounts at any time?

Reputational risks are considered part of banks’ business decision-making, but are subject to fair dealing and equality concerns, which means that people cannot be denied services on the basis of protected characteristics such as gender or race. The city’s regulator, the Financial Conduct Authority (FCA), confirmed that the rules, which have been inherited from the EU, cover people’s political views.

Those rules, which came into effect through the Payment Accounts Regulations (PAR) 2015, gave people in the UK the right to have a basic bank account and detailed protections against discrimination.

The legislation, prior to Brexit, establishes that “a credit institution must not discriminate against consumers who legally reside in the European Union because of their nationality or place of residence or for any other reason mentioned in article 21 of the Charter of Fundamental Rights of the European Union when said consumers request or access a payment account.”

The letter states: “Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic characteristics, language, religion or belief, political or other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.”

The matter is a bit more confusing if a lender argues that an individual’s views do not align with their values ​​or purpose. FCA chair Ashley Alder told parliamentarians on the Treasury committee on Wednesday that “for banks and other commercial enterprises, it is fundamentally up to them to choose who they do business with.”

He said he was “not aware of anything in the FCA rule book that gets to the point of how banks judge their own attitude to reputational risk, if that is what it is.”

skip previous newsletter promotion

Has this happened before?

Yes. Reputational concerns have resulted in the closure of accounts of individuals and companies involved in sex work, or in the pornography and adult entertainment industries, as well as businesses related to CBD and cannabis.

In 2021, it emerged that OnlyFans, the online subscription platform known for hosting adult content, had closed its company’s accounts at UK-based Metro Bank and had run into trouble with US lender BNY Mellon, which began flagging and rejecting cash transfers.

OnlyFans later said that it had reached a new agreement with its lenders and payment providers, but others in the industry have not been so lucky.

What recourse do I have if I believe I have been treated unfairly?

If a customer believes they have been discriminated against or treated unfairly by their bank, they can file a complaint with the Financial Ombudsman Service (FOS).

The FOS will take evidence from the client and the bank before making a decision. Your ruling could force the bank to correct its error, which could mean reinstating an account and even paying compensation to the customer.

The process could take months, and the initial evaluation alone can take up to 90 days. If it is a complex complaint or if either party disagrees with the initial assessment, it will take longer for the matter to be resolved.

Leave a Comment