A report released today by the UK’s Financial Conduct Authority (FCA) has found no evidence that politicians’ bank accounts are being closed due to their political views.
The investigation was initiated following a dispute involving former UKIP leader Nigel Farage and Coutts, the bank that closed his account earlier this year. Farage alleged that the closure was politically motivated, which prompted other public figures to raise similar concerns. Consequently, the Chancellor ordered a probe into ‘debanking’ to better understand how banks treat ‘politically exposed persons’ (PEPs).
The FCA gathered data from 34 UK financial institutions, including banks, building societies, and payment services, covering the period from July 2022 to June 2023. The information collected included details on:
– The number of accounts terminated
– The number of accounts suspended
– The number and type of consumers whose applications were declined
– The reasons for these decisions
– Complaints received regarding these issues
While all responding firms supplied data, FCA representatives cautioned that the results had limitations, as some could only provide information at the account level rather than individual customer level. The report stated, “we do not believe we can currently accurately use aggregate figures or averages.”
The investigation revealed only four instances of reported accounts closed or complaints made due to the ‘expression of political or any other opinions’. Upon further inquiry, it became clear that the actual reasons for account actions were primarily linked to customer behavior, such as inappropriate language directed at bank staff.
The report concluded that “the information we have received so far does not suggest that accounts have been closed because of the political beliefs or views lawfully expressed by account holders.” Out of the firms surveyed, eight stated they do not engage in such practices. However, the FCA plans further analysis to validate these findings.
The FCA emphasized that the data presented in the report was based on submissions from the 34 firms rather than an exhaustive investigation by the regulator. Moreover, they indicated a need for a detailed validation of the information collected.
The FCA is also undertaking a focused examination concerning the treatment of politicians, specifically regarding PEPs, rather than simply individuals expressing political opinions.
In response to the FCA’s report, Farage took to X (formerly Twitter), claiming the findings constitute a “whitewash.” He criticized the regulator’s effectiveness, questioning the future of the banking industry under such oversight.
The fallout from the Farage incident led to the resignation of Coutts CEO Peter Flavel and NatWest’s chief executive Dame Alison Rose.
Nikhil Rathi, FCA Chief Executive, noted that while no firm had reported closing accounts primarily due to political views, further investigation is necessary. He highlighted the importance of discussing the balance between access to banking services and the need to address financial crime, as well as exploring whether everyone should have a right to an account, as practiced in some other nations.
The FCA’s planned actions include:
– Further follow-ups to ensure the accuracy of the reported data.
– Comprehensive supervisory work to ascertain firms’ reasons for account closures linked to political reasons and reputational risk.
– Additional reviews concerning the applications and terminations of basic bank accounts.
– Research into the reasons behind the 1.1 million unbanked individuals in the UK and their characteristics.
– An initiative in Q1 2024 aimed at enhancing consumer access to financial services.