No evidence banks are closing accounts due to political beliefs, says UK watchdog

By Huw Jones

LONDON (Reuters) -There is no evidence so far that Britain’s banks have been closing accounts because of people’s political views, though more detailed scrutiny is needed, the Financial Conduct Authority said on Tuesday.

British finance minister Jeremy Hunt last month asked the FCA 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.

An internal bank document unearthed by Farage later showed the decision was partly taken over his views, alongside commercial considerations.

The row over the account closure led to the shock departure of NatWest CEO Alison Rose and Coutts CEO Peter Flavel.

The FCA said on Tuesday that it looked at data from 34 banks and building societies, focusing on July 2022 to June 2023, but the speed of its inquiries meant there were some gaps, limitations and inconsistencies to information provided.

It was not possible to put forward a reliable initial set of findings on the groups who are likely to be most impacted by account declines, suspensions and terminations, it said.

“Consequently, 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,” the FCA said in a report.

“By far the most common reasons providers gave for declining, suspending or terminating an account were because it was inactive/dormant or because there were concerns about financial crime,” it said.

The FCA said it will be doing further work over coming months with “outlier” firms in particular with high rates of declining accounts to verify the data and to better understand the reasons behind, for example, the closure of accounts due to reputational risk.

Andrew Griffith, Britain’s financial services minister, said free speech is a fundamental human right and noted the FCA’s initial report.

“Clearly there is more to be done to validate the submissions by banks and to ensure that the FCA have thoroughly followed up de-banked customer perspectives,” Griffith said.

An independent review commissioned by NatWest is looking specifically at Farage, who dismissed the FCA’s findings.

“The FCA says it finds no evidence of politicians being ‘debanked’ over political views. This new report is a whitewash and a joke. If we don’t have a regulator that is fit for purpose, what hope is there for our banking industry?,” Farage posted on X social media platform.

While an account cannot be closed due to lawfully held political views, the FCA said government and lawmakers should consider whether people and businesses should be given a legal right to an account, as is the case in countries like Belgium and France.

Separately, the FCA is reviewing how banks conduct mandatory extra checks on “politically exposed” customers and their families for money laundering risks, with a report due by the end of June 2024.

(Reporting by Huw JonesEditing by Christina Fincher and Louise Heavens)