FCA publishes letter on freedom of expression and provision of banking services

FCA has published a letter to HM Treasury on freedom of expression and the provision of banking services, in response to increased public concern about payment accounts being closed without fair justification. The letter comes after the Government set out proposed reforms to enhance requirements relating to contract termination for payment accounts.

In its letter, FCA confirms its support for the Government’s plan to increase the notice period for account closure from 60 to 90 days. It says it will work with firms to ensure effective implementation and enforcement action thereafter. FCA highlighted that it does not adjudicate individual cases, and that dissatisfied consumers may complain to their banks or refer matters to FOS if an issue persists. For the latter, they might benefit from the range of remedies FOS can require of banks, including keeping an account open or directing one to be reopened.

FCA noted that AML/CTF rules mean that a firm might deem it necessary to withdraw services or freeze an account on financial crime grounds, including at short notice. In such cases, FCA expects firms to investigate in a reasonable time and not unnecessarily deny customers access to their accounts.

The letter recognised that the extent to which banks might be terminating accounts on other grounds – which may be less justified, and in some cases, unlawful – was less clear. FCA has therefore been preparing a data exercise on consumer and business payment accounts, and will shortly ask firms to provide information on:

  • the number of account terminations and reasons for these;
  • the number of complaints about terminations and their outcomes;
  • the number of accounts opened;
  • the number of new applications refused;
  • relevant complaints data; and
  • policies and procedures.

An initial assessment is expected by mid-September. FCA distinguished this work from its ongoing review of the treatment of PEPs and their family members, for which the terms of reference will be published next month.

Laura Wiles