Over One Million Bank Accounts Shut Down Within Four-Year Period
On Friday, the Treasury stated that there was no reason why the banks could not voluntarily adopt its proposals. However, none of the banks contacted by the Mail on Sunday last week claimed to have adopted the new rules, although they asserted that they were working as quickly as possible to implement them. The individual responses from the banks are provided below.
UK Finance, the banking industry's trade association, mentioned that its members were diligently working to implement the rules. It added that one aspect they needed to address was the interplay between closing accounts for financial crime reasons and the restrictions on the information they could provide to customers.
Currently, if a bank suspects an account is being used for money laundering, it is legally prohibited from explaining the reasons to the account owner.
Our call for action comes as banks are on track to close a record number of accounts this year. According to a Freedom of Information request made to the City regulator, the Financial Conduct Authority (FCA), the number of account closures this year may exceed last year's figure of 343,350.
As of now, nearly 200,000 accounts (both retail and business) have been closed this year, resulting in over one million accounts being shut down since 2019. However, the FCA data underestimates the total closures as it only considers accounts closed due to financial crime concerns and doesn't include those closed based on the account holder's political views, such as the case of Farage.
Closed shop: If banks agreed to adopt the Government's proposals now, it would mean customers have to be given a proper reason for their accounts being closed
Our campaign for the immediate introduction of a more consumer-friendly regime is supported by banking experts and victims of account closures.
James Daley, founder of Fairer Finance, a company dedicated to ensuring fair treatment for financial customers, doubts that the necessary legislation and rules will be introduced as quickly as the Government hopes. The Treasury stated that the rules were likely to be implemented in the 'Autumn.'
Daley suggests that banks should collaborate through UK Finance to establish a code for fair treatment of customers when their accounts are selected for closure. He emphasizes the need for clear criteria on when it is acceptable to close an account and when it is not, along with efficient protocols for investigating issues that could lead to account closures.
Daley believes that banks should only close accounts when there is clear evidence of criminal activity and never due to someone's political views.
Regarding business account closures, Martin McTague, chair of the Federation of Small Businesses, supports the Government's efforts to clamp down on unjust personal bank account closures. However, he questions why the same basic rights are not extended to small businesses.
McTague asserts that small businesses should not be caught off guard by sudden account closures and deserve better treatment. He suggests that, where possible, banks should be clear and upfront about the reasons for account closures, as this can help clear up any confusion.
Adam Siddle agrees that the Government's rules are positive, but he emphasizes the need for urgency. He believes that banks should be more transparent when dealing with customers whose accounts they intend to close.
Adam shares his own experience, where his NatWest bank account was closed with only 14 days' notice during the lockdown three years ago. Despite his efforts to reverse the decision and his complaint to the Financial Ombudsman Service, he received no explanation from NatWest. His account was eventually reinstated after 97 days, without any apology.
Adam advocates for the proposed 90-day notice period by the Government, as it would provide innocent customers with the opportunity to challenge closure decisions. He hopes that such a rule could have spared him the trauma of going through the account closure and reopening process.
Last year, the Financial Ombudsman Service received 1,389 complaints on account closures, of which a quarter were upheld. The Ombudsman encourages anyone unhappy with a closure to contact their service, stating that each case is investigated on its own merits.
The message to banks and building societies is clear: it is time to step up and play fair when it comes to account closures.
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