Emma RadmoreThe All Party Parliamentary Group on Fair Business Banking has reported on de-banking. The report looked at why banks have been refusing or withdrawing banking facilities giving reasons that customers felt were at best unreasonable and at worst unlawful. The report notes that the Nigel Farage incident proved that there was a problem but said many people have been “debanked” on a less detailed analysis than emerged in that case, and that banks’ behaviour generally has led to the conclusion that many banks think some customers are just not “worth the candle”.
The report concludes that the conflation of banks’ obligations to society and to shareholders, and to fight financial crime yet make a profit, mean that blocks of customers have been debanked on a blanket basis.
The report looks at various categories of customer who have abnormal risk profiles, which make banks consider them problematic. The group found evidence that all members of these groups are treated as the same, with no consideration for any customer on a case-by-case basis.
The report suggests that there is no simple answer to the problem but calls on the regulator to talk to banks about compliance costs, and encourages banks to develop a version of the Basic Bank Account for small businesses. It also says banks should not be able to withdraw facilities simply due to cost.
Further, the report notes the effects on banks’ decisions of their need to manage their reputations, and says reputation has taken on a position of “outsized importance”.
Finally, the report considers financial crime compliance and reasons for debanking, noting that it is often hard to establish exactly why a bank has debanked a customer. It says this is unacceptable, and also notes that many categorisations of reasons for debanking seem to be wrong. And the number of SARs is totally out of kilter with enforcement actions that follow.