Despite all the recent front-page attention given to Nigel Farage and today’s development – the resignation of NatWest chief executive Alison Rose – there is something else you should know: banks have been quietly closing accounts without giving their customers any reasonable explanation for decades. Setting aside Farage’s politics and personality, and Coutts’s fragile disposition when it comes to people rich enough but arguably not wholesome enough to utilise their elite banking facilities, it should concern us when banks close our accounts with little or no warning. Ordinary people don’t get the prime minister hollering for justice, and we certainly don’t get apologies from CEOs.
My own experience from some 15 years ago began with the receipt of a polite letter from Royal Bank of Scotland informing me that it no longer wished to offer me banking facilities, and giving me 30 days to take my business elsewhere.
I didn’t need an explanation. I knew the reason. My partner at the time – who I was financially associated with – had a business account provided by RBS, and an overdraft that was on life support. The bank switched off the machine. We were unceremoniously dumped as a package deal. I opened an account elsewhere and never looked back.
But for some, opening a new bank account after such an ordeal becomes mission impossible. You need a valid photo ID, a recent utility bill, money, an address and a credit check. If any of these components are missing, you don’t get an account. Even if you have all the paperwork, you can simply be told “no”, without any explanation or comeback.
In my job as a debt adviser, I have seen countless such cases. One that comes immediately to mind is a former client who was abused financially by their ex-partner. When my client eventually got away from her abuser, she found out that she was thousands of pounds in debt and had accumulated what is known as a “fraud marker”.
This means that a mere suspicion has been registered with the fraud prevention service Cifas, garnered from its rather sinister-sounding “fraud risk databases and networking opportunities”. For my client, there was no accusation of fraud, no prosecution, and no knowledge of any fraud, just a registered possibility of risk, which left her without banking facilities at an extremely vulnerable point in her life. No amount of pleading or explaining her situation worked. The banks turned her away. The marker is a crimson flag that more or less guarantees no other bank will touch you.
The website MoneyHelper – a government-backed advice service – states that a bank can refuse you an account if “they think you’ll use the account unlawfully or fraudulently”, or close your account if “there are concerns” that you might do so. But banks thinking things is a very fuzzy concept. What do they base this on, and have they any evidence? Do they give you a chance to explain your circumstances? They do not.
We’re talking about basic bank accounts here: no overdraft facilities, no credit options, just money in and money out and, if you’re lucky, a debit card you can use online. Without even a basic account, life becomes very difficult. Take a recent case of mine: my client’s universal credit had been paid into an account that was then closed without warning. She couldn’t access her own money, and despite a call to the bank to try to resolve matters, she was told nothing could be done. This was money that she needed for food, gas and electricity – the basics of survival. We rang the bank together, threatened to complain, and eventually, she was advised that if she could get to a branch (also not easy) with her photo ID, then she would be given her cash. This was successful.
The bank did not give a reason why the account had suddenly been closed, and the client did not have time to make alternative arrangements. Her universal credit is now paid into a friend’s account, but this makes paying bills and proving your existence very difficult.
If only my client had been notorious enough, or had easy access to public platforms, she might have got an apology from the boss and a new account. But alas, no one responded to our complaint. People who are struggling to make ends meet don’t have the time or headspace to start chasing down the financial ombudsman (although they definitely should) or sending subject access requests to banks (as they also should), because they are worn down just trying to survive.
Account closures happen all too often, and the knock-on effects are even more troublesome for non-millionaires. It’s more than a worry about where to put your riches: it’s a worry about how you will pay your rent and council tax when you can’t simply give card details over the phone. Booking things in advance is out of the question, while having a month’s income in cash in your pocket comes with problems and risks, too.
Some good may yet emerge from the Farage fiasco, with his very public debanking leading to deeper scrutiny of our banking sector’s behaviour towards its customers. Proposals include such cordialities as being told why your account is being closed, and extension from 30 days to 90 in which to find an alternative. Which is great news, given that a bank account – and the ability to bank online, when branches on our high streets are disappearing – is a piece of critical infrastructure that most of us cannot live without.
• Amy Taylor is a debt adviser and chair of Greater Manchester Money Advice Group
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