Receive free UK banks updates
We’ll ship you a myFT Daily Digest e mail rounding up the newest UK banks information each morning.
“Members of the opposition deserve bank accounts” ought to be a assertion of the apparent. But it was a sentiment British MPs felt the necessity to reiterate this week after Nigel Farage — a driving power behind the Leave vote within the UK’s 2016 Brexit referendum — launched components of a memo exhibiting that Coutts, a personal financial institution owned by the NatWest group, had dropped him as a buyer partly on political grounds.
The internal document obtained by Farage exhibits that Coutts, which is understood for its prestigious clientele, factored within the former UK Independence celebration and Brexit celebration chief’s opinions on Europe, immigration, and Donald Trump of their choice to shut his Coutts account. He was subsequently provided an account with NatWest. Yet, no matter what one could consider Farage’s views, the incident should trigger unease in a nation that prides itself on democratic values.
Private monetary corporations have the appropriate to bar clients who could pose a reputational threat due to involvement in criminality or corruption. This does not apply to Farage, nonetheless. And, although the memo exhibits the financial institution additionally thought of monetary thresholds and prices of their deliberations, it suggests persevering with to “bank” the ex-Ukip chief was not suitable with Coutts “given his publicly-stated views that were at odds with our position as an inclusive organisation”. Late on Thursday, the NatWest chief government Alison Rose apologised to Farage for what she referred to as “deeply inappropriate comments”.
Individuals have the appropriate to lawful free speech, and banks, regulated by the Financial Conduct Authority, have a obligation to deal with clients pretty. The Farage case additionally highlights a broader drawback round how banks take care of high-profile clients. They should adjust to the “politically exposed persons” regime — relating to people who might abuse their profile for personal achieve, and launder the proceeds. Banks have to perform typically pricey enhanced scrutiny of PEPs, alongside their households and associates.
The EU-derived rules are extra stringent than these in another jurisdictions as they require tight checks on home in addition to international PEPs. The FCA launched steerage making an attempt to encourage extra flexibility. But a rise in fines and the introduction of corporate criminal offences for failing to stop fraud have prompted some banks to take further warning. The upshot is an anti-money laundering regime that’s each failing to clamp down sufficiently on “dirty money” flows and unfairly penalising the harmless. Britain’s Chancellor Jeremy Hunt has revealed he, too, was refused a checking account beneath the regime. Difficulties opening financial institution accounts additionally solely serve to blight additional the attraction of getting into politics.
Fighting international soiled cash flows does require a rigorous anti-laundering regime. The “Qatargate” scandal by which European parliament members face allegations of being influenced by international governments is a living proof. But it should be extra clearly outlined, and should not be used as cowl for barring clients based mostly on their political opinions.
Authorities should work carefully with the banking sector to make clear the purple strains. The FCA should additionally re-emphasise that legally-held political opinions are irrelevant in any choice on clients — and be prepared to examine and penalise banks that unfairly deny services to purchasers they disagree with. The authorities’s announcement on Thursday that it’ll improve the discover interval earlier than accounts are terminated and require banks to present extra particulars on the grounds is welcome.
The Farage case underscores the problem banks face in navigating the “culture wars”. Clarity from the authorities and transparency from monetary corporations would assist douse the flames. As for NatWest — by which the UK authorities nonetheless holds shut to a 40 per cent stake — its inclusivity efforts would do higher to deal with widening entry to its banking services, together with for the 1mn-plus British adults who haven’t any account in any respect.
