Can my bank close my account because of my views? - BBC

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By Michael Race

Business reporter, BBC News

The fallout from Nigel Farage having his bank account closed has raised questions over whether banks can terminate accounts due to a person's political beliefs.

The former UKIP leader has said an internal document from private bank Coutts indicated his political views were part of the decision for the account being closed.

Dame Alison Rose has resigned as chief executive of NatWest which owns Coutts, after she admitted discussing Mr Farage's account with a BBC journalist was a "serious error of judgement".

Are bank accounts being closed due to people's views?

In short, it isn't clear either way.

Mr Farage claims he is "far from alone" in this matter, claiming that "tens of thousands of people have had their accounts closed".

However Sir Philip Augur, a former member of the Future of Banking Commission, which was set up to make banks more accountable to customers after the 2008 financial crisis, said he did not think cases like Mr Farage's were widespread.

"No doubt there will be lots of complaints, no doubt every single bank will be scrutinising their processes really carefully from now on," Sir Philip told the BBC's Today Programme. "But I would be really surprised if this is a massive industry wide issue."

The Financial Ombudsman Service told the BBC that it received 1,389 complaints about closures of current accounts in 2022 and 2023 but said it could not provide information on the reasons behind them.

What are the rules?

The law states that every person in the UK has a legal right to hold a basic bank account that gives them the ability to receive and make payments.

Legislation says a credit institution (legal jargon for a bank) "must not discriminate against consumers legally resident in the United Kingdom by reason of their nationality or place of residence or by reason of sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion".

Nikhil Rathi, chief executive of the Financial Conduct Authority, told MPs last week that legislation around payment accounts meant banks cannot "discriminate on the basis of political views".

Angela Knight, former chief executive of the trade body British Banking Association, said it didn't matter what type of bank account someone had - from very basic or one with "bells and whistles" such as overdrafts, savings accounts and standing orders - rules preventing banks discriminating are the same.

But she said banks can refuse customers when fraud, for example, is suspected or when a person's conduct inside a bank or towards bank staff amounts to a public order offence or harassment.

One potentially complicating factor are figures who are classed as a politically exposed person, or PEP.

These are people who hold a prominent position or influence who may be more susceptible to being involved in bribery or corruption.

Banks are required to do extra due diligence on PEPs.

The government has said some banks might be "failing to strike the right balance" in their approach to providing services to PEPs.

It has said accounts should be not closed just because of someone's status as a PEP.

But can it close my account because my views are "controversial"?

As the law states, a bank should not close an account because of a "belief, political, or an other opinion".

However, if a person drops under the wealth threshold that some banks have it could prompt the lender to conduct a wider review of the customer's profile, including reputational and legal risk.

Gary Greenwood, a banking analyst at Shore Capital, said the entire banking sector might have to change the way it approaches account closures.

Lenders will need to "demonstrate that they have gone through the proper processes", he said.

But Mr Greenwood said banks will still need to consider legal and regulatory requirements such as financial crime, as well as whether their reputations will be tarnished by having some customers on their books.

What is happening now?

The government met with bank bosses on Wednesday who committed to government reforms on the closure of customer accounts.

The reforms include a requirement that banks give customers a termination notice period of 90 days. This would giving customers more time to challenge a decision through the Financial Ombudsman Service or to find a replacement bank.

Banks will also be required to spell out why they are terminating a bank account, but there will be limited exceptions to such requirements, for example when investigations into criminal activity are ongoing.