Right to Bank: UK’s top financial regulator wants answers, SA regulators mum

Standard Bank Heerengracht Towers, Foreshore, in Cape Town. Picture: Armand Hough / African News Agency (ANA)

Standard Bank Heerengracht Towers, Foreshore, in Cape Town. Picture: Armand Hough / African News Agency (ANA)

Published Aug 14, 2023


The United Kingdom’s top financial regulator will give the nation’s largest banks two weeks to explain why they have been shutting customer accounts.

This is in response to the scandal linked to the threatened closure of politician Nigel Farage’s bank accounts.

The Financial Conduct Authority (FCA) will write to more than 20 of the UK’s largest lenders asking them to confirm how many customer accounts have recently been closed, suspended or denied, and explain the reasons why those services have been blocked.

It comes a week after the chancellor, Jeremy Hunt, called on the FCA to accelerate an investigation into whether lenders have been “debanking” customers over their “lawfully held political beliefs” on a widespread scale.

In South Africa, the country’s four largest banks - Nedbank, Standard Bank, FNB, and ABSA - have been conducting themselves in a similar manner, operating as a law unto themselves shutting the accounts of individuals, companies, and group companies employing thousands of black South Africans, with little to no intervention by regulators or the South African government.

UK banks will have just over two weeks to gather the data, which will cover personal and business customers, including political parties. Lenders will also be forced to reveal how many complaints they have fielded from barred customers.

Independent Media is also investigating a similar case with the South African banking ombud.

The political storm over so-called debanking of customers was originally sparked by former Ukip leader Nigel Farage, who launched a public campaign after the private bank Coutts decided to shut his accounts.

Farage obtained documents from Coutts showing that, while he had been below the bank’s “commercial criteria” for some time – referring to its requirement to hold £1m in investments or loans, or £3m in savings – the decision to shut his accounts was also based on concerns that his “xenophobic, chauvinistic and racist views” posed a risk to its reputation.

Banks in the UK are not allowed to shut accounts or deny services because of customers’ political views or beliefs.

Similarly, South African banks have been found largely wanting when asked to explain what “reputational risk” means to them, what the parameters are, and how those parameters are applied to its private individual, or group companies accounts.

The UK scandal led to the resignation of Alison Rose, the chief executive of its owner, NatWest, after she admitted being the source of a BBC story suggesting his account was closed for commercial reasons alone. The chief executive of Coutts, Peter Flavel, was asked to leave over the mishandling of the situation days later.

There has been no such similar action or recourse by the South African banking fraternity.

Farage said last week that Coutts’ newly installed boss had since offered to keep his accounts open, though the former Ukip leader did not immediately confirm whether he had accepted. NatWest has declined to comment, according to The Guardian.

The saga has also given life to separate concerns that UK politicians are denied services or face excessive scrutiny, since they are categorised as politically exposed persons (PEPs). Regulations currently require banks to conduct additional checks on PEPs, to protect against corruption and financial crime.

The matter gained further traction after digital bank Monzo closed the account for the political party run by anti-Brexit campaigner Gina Miller.

Monzo told The Guardian it was a matter of policy, since it does not accept any political parties. The lender said that the account was opened erroneously as it was not categorised appropriately in the application.

* The original version of this story can be found here.