One MILLION bank accounts closed in just four years

The Mail on Sunday today calls for banks to agree IMMEDIATELY to adopt new consumer-friendly policies governing the closure of customers’ accounts.

New rules are (hopefully) being introduced by the Government later this year. But we believe it is incumbent upon the banks to adhere to them now – and to extend them to cover both personal and small business customers. Business, charitable and club accounts are not covered by the proposed new Government regime.

Why do we believe the banks should do the decent thing? It is simple. The current system, which apparently allows banks to shut accounts without rhyme or reason, is unfair and Kafkaesque. It gives the banks licence to do what they want – as evidenced by the closure of Nigel Farage’s Coutts account – while leaving impacted customers financially emasculated.

If banks agreed to adopt the Government’s proposals now, it would mean customers would be given a reason for their accounts being closed.

They would also be given more time (90 days) to challenge closures, maybe by filing a complaint to the Financial Ombudsman Service. Currently, banks do not have to provide an explanation, while notice periods can be as short as 14 days, leaving customers bankless and financially stranded.

Closed shop: If banks agreed to adopt the Government’s proposals now, it would mean customers would be given a reason for their accounts being closed

On Friday, the Treasury said there was no reason why the banks could not adopt its proposals voluntarily.

Yet not one of the banks contacted last week by the MoS said they had adopted the new rules – although they claimed they were working as quickly as possible to implement them. Their individual responses are shown opposite.

UK Finance, the banking industry’s trade association, said its members were ‘working hard’ to implement the rules. It added: ‘One thing people need to work through is the interplay with closing accounts for financial crime reasons and the fact firms are often restricted in the information they can give.’

Currently, if a bank suspects an account is being used to launder money, it is legally prevented from providing an explanation to the owner of the account.

Our clarion call comes as banks are on course to shut a record number of accounts this year. A Freedom of Information request made to City regulator the Financial Conduct Authority (FCA) indicates that the number of account closures this year could top last year’s figure of 343,350.

So far this year, nearly 200,000 accounts (retail and business) have been closed. It means more than one million accounts have been shut since 2019. Yet the FCA data is an underestimate because it is based solely on accounts closed because of concerns over financial crime.

So, for example, it does not include those accounts – like Farage’s – shut as a result of the political views of the holder. Our campaign for the immediate introduction of a more consumer-friendly regime is backed by both banking experts and victims of account closures.

James Daley is founder of Fairer Finance, a company dedicated to ensuring customers of financial firms are treated fairly. He is sceptical that the necessary legislation and resulting rules will be introduced as quickly as the Government hopes – the Treasury told the MoS that ‘autumn’ was when they were likely to kick in. Daley says banks should be working together through UK Finance to agree a code for fair treatment of customers when accounts are selected for closure.

He adds: ‘There should be clear criteria around when it is acceptable to close an account, and when it isn’t – as well as clear protocols for quick investigations of any issues that could lead to account closures.

‘It should never be acceptable for banks to close accounts because of someone’s political views – but I think the legislation should go further and limit banks to only closing accounts when there is clear evidence of criminal activity.’

Martin McTague, chair of the Federation of Small Businesses, welcomes the Government’s proposed clampdown on unjust personal bank account closures. But he says it begs the question: ‘Isn’t it high time the same basic right was extended to small businesses?’

He says small businesses ‘shouldn’t be blindsided by sudden account closures – they deserve better’. He adds: ‘We understand that in some cases, banks can’t disclose why an account is shuttered, but where the law permits they should be clear and upfront. This way, banks can promptly clear up any confusion, sparing everyone the guessing game.’ Adam Siddle says the Government’s rules are welcome, but he believes time is of the essence. He says: ‘As a matter of course, the banks should be more transparent when dealing with people whose accounts they want to close.’

Adam, from Waltham in Lincolnshire, is talking from bitter experience.

Shock: Adam Siddle whose NatWest account was shut down in lockdown, with son George

Three years ago, just after the country went into lockdown, he had his NatWest bank account closed with only 14 days’ notice given.

We covered his story at the time – an experience made worse by lockdown and the fact that he and his wife Megan had four young children between the ages of two and seven.

Despite pleading with staff at his local NatWest branch to reverse the decision – and writing to the bank’s boss Dame Alison Rose (who resigned last month over the closure of Farage’s account) – Adam had no joy and opened an account with Halifax.

No explanation was ever given by NatWest, leading him to tell the MoS: ‘I thought that in this country, you were presumed innocent until proven guilty. But not when it comes to banking.’

Adam’s NatWest account was eventually reinstated after 97 days – without an explanation or apology.

He complained about NatWest’s behaviour to the Financial Ombudsman Service and got compensation of £350.

Adam, a self-employed supervisor for a civil engineering company, says the 90-day notice period proposed by the Government makes good sense.

He says: ‘Innocent customers must be given every opportunity to challenge a closure decision. If that rule had applied three years ago, I presume I wouldn’t have had to go through the trauma of having my account closed and then reopened three months later.

‘No one should have to go through that. I was made to feel like a criminal.’

Last year, the Ombudsman received 1,389 complaints on account closures, a quarter of which were upheld. On Friday, it said anyone unhappy about a closure should contact the service. It added: ‘Each case is investigated on its own merits.’

To banks and building societies, our message is loud and clear: it is time to step up to the mark. Start playing fair, not unfair, on account closures.

This post first appeared on Dailymail.co.uk