No evidence of customer’s ‘politics’ triggering UK bank account closure, says FCA 

On 19 September, the Financial Conduct Authority (FCA) published the outcome of its initial data gathering exercise on the reasons behind UK bank account closures. The exercise was prompted by the public controversy around Coutts’ decision to close an account held by former UKIP leader, Nigel Farage, which led to the resignation of NatWest CEO, Alison Rose. 

The watchdog found that the main reasons banks, building societies and payment firms gave for closing accounts in the period from July 2022 to June 2023 were that accounts were inactive/dormant or that there were concerns about financial crime. Data gathered confirmed that no provider cited a customer’s political views as the primary trigger for account closure. UK regulations on payment accounts (which apply to banks and building societies but not payment firms) prohibit discrimination on a variety of grounds, including based on an individual’s ‘political opinions’. 

However, the FCA’s interim announcement is unlikely to be the end of the matter. The FCA has set out its intention to do further work, especially around accounts being closed due to ‘reputational risks’. Whilst the FCA recognises that such closure may sometimes be justified (for example, for sanctioned individuals and their close associates), it is seeking assurance that relevant criteria are not being too broadly interpreted. 

The accompanying FCA press release refers to the absence of a legal right to an account in the UK (which exists in other jurisdictions). Additionally, it notes that the anti-discrimination provisions in the payment account regulations do not extend to businesses, charities, political parties and civil society organisations. These observations may hint at an imminent review of UK payment account policy. Indeed, the FCA’s accompanying letter to the Chancellor, Jeremy Hunt, also discusses the benefits of digital identities for financial inclusion and the potential contribution of online and social media platforms to arrangements for compensating consumers who fall victim to payment fraud. 

Whatever the future holds on the policy front, payment account firms can already expect increased scrutiny from the FCA. As well as follow-up work from the hastily-conducted data exercise, the FCA anticipates a greater focus on account provision as part of its supervision of the new Consumer Duty. The FCA will also be undertaking further research and supervisory work to better understand the availability of basic bank accounts and why 1.1m people in the UK remain unbanked. This project will involve engaging with consumer groups to further assess the impact of accounts being declined, suspended or closed and the launch of a ‘financial inclusion’ TechSprint in early 2024.