Amidst the backdrop of the Coutts banking scandal, figures obtained by the Mail on Sunday reveal that U.K. banks are on the verge of breaking account closure records, with over a million accounts shuttered in the past four years. Here’s an excerpt:
More than a million bank accounts have been shut since 2019 – and the rate of closures is accelerating, the Mail on Sunday can reveal.
Figures obtained under a Freedom of Information request show that banks are on track to smash the previous record of 343,500 accounts closed last year.
The alarming news comes amid the continuing fall-out from the Nigel Farage affair.
NatWest boss Dame Alison Rose was forced to quit her job last month over the closure of the former UKIP leader’s account at Coutts – the lender’s private banking arm – partly because of his political views.
Banks can shut accounts with as little as 14 days’ notice if they suspect it is being used to launder money, which would leave innocent customers financially stranded.
The Government plans to introduce new rules to give customers up to 90 days to challenge closures.
Banks will also have to explain why accounts have been closed. But campaigners and victims claim this is unfair to the thousands of innocent customers who have been de-banked despite doing nothing wrong.
“I think the legislation should go further and limit banks to closing accounts only when there is clear evidence of criminal activity,” said James Daley, founder of campaign group Fairer Finance.
The de-banking data shows that so far this year almost 200,000 bank accounts have been axed because of concerns over financial crime activity such as fraud and money laundering.
The rate of account closures has exploded from under 50,000 in 2016 when the Financial Conduct Authority (FCA), the City regulator, introduced new reporting rules.
These require almost 250 lenders to submit an annual return of account closures.
The FCA said more monitoring by banks may explain some of the recent spike in shutdowns.
But experts say banks have become too risk-averse and rely too much on artificial intelligence to investigate and flag fraudulent behaviour.
“There has been a dumbing down of standards in the past 12 months or so, and many of those affected are in fact innocent of wrongdoing,” said Jeremy Asher of law firm Setfords.
Worth reading in full.
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