Forget Farage: who will fight for the genuine unbanked millions?

Receive free UK banks updates

We’ll send you a myFT Daily Digest email rounding up the latest UK banks news every morning.

In what can only be described as an outrage, I have been cancelled by Coutts. I assume this is down to my unorthodox views and behaviour.

Yes, I firmly believe that Selling Sunset is excellent TV despite pressure from the Succession-obsessed blob. Yes, I have been known to eat refried beans straight from the tin. Yes, I think swimming in the sea is overrated. But so what? I’ll stay on my towel, thanks. We must protect the freedom of beach. 

In fairness, I never actually had an account at what was once known as “the Queen’s bank”. But from a glance at their website, it is obvious I have been marginalised. This can only be down to my views and not my lack of the requisite £3mn in savings, or £1mn in investment and borrowings. 

At least I’m in good company. Nigel Farage, former Brexit party leader, has lost his account with Coutts and been offered a bog-standard NatWest one (it owns Coutts), after seemingly falling below the financial criteria. Farage thinks this, plus his rejection by other banks, is because he is a “politically exposed person” (PEP) — and that he has been blacklisted for his views.

Leaving aside the paranoia of the culture wars, there are some oddities about the rules on PEPs.

Money laundering rules require banks to treat PEPs, considered to come with greater risk of bribery and corruption, with care. The European rules which became UK law in 2017 were stricter than international equivalents, requiring enhanced due diligence for both foreign and domestic PEPs. In other markets, it is usual for domestic politicians to get a lighter touch, with only the red-flagged subjected to enhanced screening.

The UK Financial Conduct Authority introduced guidance trying to encourage more flexibility, and specifying that only those in “truly prominent positions” be treated as PEPs. But some banks take a cautious approach, sticking closely to the letter of the law, especially given the stream of large fines for lenders for poor anti-money laundering controls. 

Even the chancellor, Jeremy Hunt, is not immune: he claims that the online bank Monzo refused to let him open an account (the bank declined to comment).

You can’t really blame the banks. Under the senior managers regime, someone must carry the can for what one lender called an “incredibly delicate judgment”. And the government has done little to help, complains one expert, by providing, say, a list of domestic PEPs, pushing higher standards in public life, or allowing banks to rely on Companies House information.

This increases the costs of running checks — which means reluctance to take on PEP accounts, a definition that includes politicians’ family and close associates. The banks are also legally limited in what they can say when rejecting PEP accounts.

Things could get worse. Financial services legislation passed last month requires the regulator to review its guidance but doesn’t change the underlying law to make it consistent with international standards. Meanwhile, the economic crime bill introduces a criminal corporate offence for failure to prevent (among other things) money laundering. 

A current account is pretty much an essential service and there is increasingly a sense that it shouldn’t be withdrawn or denied without very good reason.

Many of the UK’s 1.3mn expats living in the EU had their UK accounts closed after Brexit because lenders chose to avoid the costs and hassle of finding a way to operate in European markets. Other groups struggle to access basic banking services because of documentation requirements and banks’ reluctance to take on accounts seen as higher risk or higher cost. 

There are still 1.2mn adults without a bank account in the UK, who are more likely to be young, from an ethnic minority, unemployed or working in the gig economy. The proportion of the population that is “unbanked” is 12 times higher in the most deprived areas compared with the least. Requiring the biggest lenders to offer “basic bank accounts” has certainly helped. There are 7mn of these no frills accounts, without any overdraft facility and with sometimes limited access to other products such as savings. Banks have a variable record on migrating such customers on to mainstream alternatives.

It all makes a bit of a mockery of the idea that the UK’s lenders are, as Farage claims, acting as woke activists. But the barriers to bank accounts do deserve attention, no matter who in society is affected.

[email protected]