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It should go without saying that members of the opposition deserve to have bank accounts. However, this week British MPs found it necessary to reaffirm this sentiment. Nigel Farage, a prominent figure in the Leave campaign during the UK’s Brexit referendum in 2016, recently revealed that Coutts, a private bank owned by the NatWest group, had closed his account partially due to his political beliefs.
Farage obtained an internal document from Coutts, which showed that the bank took into account his opinions on Europe, immigration, and Donald Trump when making the decision to close his account. Despite one’s personal stance on Farage’s views, this incident should raise concerns in a country that prides itself on democratic values.
Private financial institutions have the right to reject customers who may pose a reputational risk due to involvement in criminal or corrupt activities. However, this does not apply in Farage’s case. While the memo suggests that financial thresholds and costs were also considered, it indicates that keeping Farage as a customer was not compatible with Coutts’ stance as an inclusive organization.
Late on Thursday, NatWest CEO Alison Rose issued an apology to Farage for what she described as “deeply inappropriate comments.”
Individuals have the right to express their opinions freely and banks, regulated by the Financial Conduct Authority (FCA), have an obligation to treat customers fairly. The Farage case also highlights the broader issue of how banks handle high-profile clients. They must comply with regulations regarding politically exposed persons (PEPs), individuals who could abuse their position for personal gain or money laundering. Banks are required to conduct thorough scrutiny of PEPs and their associates, which often comes at a significant cost.
The EU-derived rules are more stringent than those in some other jurisdictions, as they require strict checks on both domestic and foreign PEPs. The FCA has introduced guidance to encourage flexibility, but increased fines and corporate criminal offenses have led banks to exercise extra caution. This has created an anti-money laundering regime that fails to adequately target illicit money flows and unfairly penalizes innocent individuals. Even Britain’s Chancellor Jeremy Hunt revealed that he was refused a bank account under this regime. Difficulty in opening bank accounts further discourages individuals from entering politics.
Fighting against global money laundering requires a robust anti-laundering regime. The “Qatargate” scandal involving allegations of European parliament members being influenced by foreign governments serves as an example. However, this regime should be clearly defined and should not be used to justify barring customers based on their political beliefs.
Authorities should collaborate closely with the banking sector to establish clear guidelines. The FCA should reiterate that legally held political beliefs are irrelevant when making decisions about customers, and be prepared to investigate and penalize banks that unfairly deny services to clients they disagree with. The government’s recent announcement to increase the notice period before terminating accounts and require banks to provide detailed grounds for termination is a step in the right direction.
The Farage case highlights the challenges faced by banks in navigating the “culture wars.” Clarity from authorities and transparency from financial institutions would help alleviate tensions. As for NatWest, in which the UK government still holds a 40% stake, efforts to promote inclusivity would be better focused on expanding access to banking services, including for the 1 million-plus British adults who currently do not have a bank account.
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