FCA sets out initial findings on bank account access and closures

The Financial Conduct Authority (FCA) has published the findings of its initial data exercise on bank account access and closures.

The information supplied by banks, building societies and payment companies suggests that no firm closed an account between July 2022 and June 2023 primarily because of a customer’s political views. The Payment Accounts Regulations ban banks or building societies discriminating on this basis.

The FCA will be doing further work with firms to verify the data and to better understand the reasons behind, for example, the closure of accounts due to reputational risk.

By far the most common reasons providers gave for closing, suspending or declining an account was because it was inactive/dormant or because there were concerns about financial crime.

The FCA’s report is the result of information gathered from firms at speed. The regulator has today set out what further work it will undertake to examine the information provided and address gaps in the data.

In its review, the FCA noted that unlike other jurisdictions there is no right to an account in the UK and some protections, for example the anti-discrimination measures in the Payment Accounts Regulations, do not apply to businesses, charities, political parties and civil society organisations.

Nikhil Rathi, FCA Chief Executive, said “While no bank, building society or payment firm reported to us that they had closed accounts primarily due to someone’s political views, further work is needed for us to be sure.”

“As we undertake that work, the time is also right for a debate on how we balance access to bank accounts with the threat of financial crime, as well as firms’ reasonable risk and commercial appetites. An important question for policy makers is whether all individuals, businesses and organisations should have the right to an account, as is the case in some other countries.”

“What’s more, international comparisons suggest robust digital identities could play an important role not only in countering financial crime but also in aiding financial inclusion.”

Commenting the FCA announcement, a  UK Finance spokesperson said “Freedom of expression is vitally important and today’s report from the FCA makes clear that accounts are not being closed because of political beliefs or other lawfully held views.”

“If an account is closed or an application declined, the main reason is dealing with financial crime concerns and the financial sector is at the forefront of efforts to tackle this crime.”

“Accounts are only closed after extensive review and customers must be treated fairly. The government has announced there will be an increased notice period and more information provided around account closures. These are important changes and we are working with the government and other regulatory bodies to implement them.”