By Huw Jones and Sachin Ravikumar
LONDON (Reuters) -British finance minister Jeremy Hunt said on Thursday he had asked the country’s financial services watchdog to urgently investigate terminations of bank accounts and suggested that lenders who have broken the law should be fined.
The practice known as “debanking” became a political issue after former Brexit Party leader Nigel Farage said his account at private bank Coutts, part of NatWest, had been closed due to his political views.
The row over the account closure led to the shock departure of NatWest CEO Alison Rose and Coutts CEO Peter Flavel last month.
“Having your bank account removed because of your political views is very clearly against the law – it shouldn’t be happening,” Hunt said in a post on X, formerly known as Twitter.
“I’ve written to the financial regulator today,” he said, referring to Britain’s Financial Conduct Authority. “They’re going to urgently investigate how widespread this practice is, and put a stop to it.”
FCA Chief Executive Nikhil Rathi said it was important to understand the scale of the issue and the drivers behind the reported increase in account terminations.
There has been a significant increase in account closures in recent years due to anti-money laundering efforts, Rathi said in a letter to Hunt made public.
“It is less clear the extent to which banks may be terminating accounts for other reasons, which may be unjustified and which, in some instances, may contravene the law,” Rathi said.
Rathi added that the watchdog was already preparing a “data exercise” to focus on banks and building societies providing payment accounts to consumers and accounts to businesses, and that Hunt’s request was in line with these plans.
“In the coming month, we will ask the largest banks and building societies to provide us with the number of account terminations and the reasons for these; number of complaints about terminations, and their outcomes,” Rathi said.
“We will also request data on the number of accounts opened; the volume of new applications refused and any relevant complaints data and information about policies and procedures.”
An initial assessment will be provided by mid-September, Rathi said.
Hunt said the FCA has the right to fine banks “very large sums of money” if they find debanking is widespread.
“I want to know if it is, and I want to know what they are doing about it,” Hunt said, adding that based on the FCA findings, the government would decide if further action is needed.
(Reporting by Sachin Ravikumar; Editing by William Schomberg and Paul Simao)