Digital Zeitgeist – The Un-banking of Britain: Over 1,000 Bank Accounts Axed Daily as Farage Leads Fight for Accountability
The UK’s high-street banks are closing more than 1,000 accounts daily, according to new data that has precipitated a growing controversy over the burgeoning issue of “debanking”. The situation has reached such a critical juncture that Nigel Farage, former Ukip leader, is calling for a royal commission to probe what he describes as a scandal.
This revelation comes shortly after Farage launched a website to champion those individuals whose accounts have been closed. His call to arms was underscored by fresh data revealing a significant rise in the number of customers abandoned by their banks.
The alarming statistics, obtained via a Freedom of Information (FoI) request made to the Financial Conduct Authority (FCA) and first reported in the Mail on Sunday, show that in the 2016-17 financial year, just over 45,000 accounts were terminated. By the 2021-22 financial year, this figure had ballooned to over 343,000, equating to more than 1,000 accounts for every business day.
When bank accounts are closed, customers frequently receive little or no explanation. The banks, in their defence, often cite concerns about financial crime, including money laundering and fraud.
Farage’s personal experience of debanking came to light after he used a subject access request to confirm that his political beliefs had contributed to Coutts, a subsidiary of NatWest, closing his account. This admission by the bank had significant repercussions. Dame Alison Rose, the CEO of NatWest Group, resigned following her controversial revelation that Farage’s account had been closed for commercial reasons. She was swiftly followed by Peter Flavel, CEO of Coutts. Farage now urges NatWest Group’s chair, Sir Howard Davies, to do likewise.
This latest data further intensifies the pressure on NatWest, Coutts, and indeed all banks, to provide answers. Farage supports a royal commission’s speedy investigation into the matter, saying, “I’ve just been inundated by small businesses, by folk all round the country. People in absolute fear, terror, lives being ruined, thousands of businesses being closed. These are people who have done nothing wrong whatsoever,” he told GB News, where he works as a presenter.
Around 90,000 individuals are estimated to be categorised as “politically exposed persons”, a designation that includes some MPs and other figures deemed potentially at risk of abusing their positions for private gain. The anti-Brexit campaigner Gina Miller has called for the FCA and government to intervene, ensuring new parties and MPs can access banking services, after digital bank Monzo informed her that her party’s account would be closed. Pro-Brexit groups have reported similar problems.
Debanking affects not only political figures but also ordinary people and small businesses. Instances have been recorded of individuals being debanked because they held cryptocurrency or gambling accounts, both perfectly legal. Others not born in the UK have found their accounts closed after making or receiving international payments. Fiona Hancock, a retired social worker doing humanitarian work across Ukraine, had her account closed by Lloyds without explanation. She was sent a cheque for her balance of £5,000 in savings and pension payments to her UK address, which was housing Ukrainian refugees.
The FCA suggests that increased monitoring by banks might explain the rise in account closures. It stated, “We know that the total number of customers that banks have ceased doing business with for financial crime reasons is less than 0.2%. Tackling financial crime remains a priority of the FCA.”
To counter this trend, the government has announced plans to change the rules around bank account closures, including mandating banks to give customers longer notice before a shutdown.
However, in a devil’s advocate stance, one could argue that banks are merely exercising their right to choose their customers and protect their operations from potential financial crime. There is no denying that financial fraud and money laundering pose significant threats to the integrity of the banking system. Moreover, stricter regulations have been put in place globally to curb such illicit activities. Banks may argue that the increased scrutiny and subsequent account closures are a direct response to these regulatory changes.
Furthermore, it is also important to remember that banking, fundamentally, is a business. As such, banks may choose to terminate accounts that are not commercially viable or pose reputational risks. While it is critical to consider the customers’ rights and welfare, banks’ autonomy in conducting their business operations should also be recognised.
Still, the issue of ‘debanking’ should not be ignored, and a clear, transparent, and fair process is vital. The ongoing public debate and calls for a royal commission could help achieve a balanced approach, where both banks’ legitimate concerns and the customers’ right to banking services are addressed adequately and judiciously.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of GPM-Invest or any other organisations mentioned. The information provided is based on contemporary sourced digital content and does not constitute financial or investment advice. Readers are encouraged to conduct further research and analysis before making any investment decisions.