The Financial Conduct Authority (FCA) in the UK has called on financial firms to review their practices regarding account denials and closures to ensure that vulnerable consumers and organizations, such as charities and pawnbrokers, are not being disadvantaged. The FCA’s report acknowledged that banks, building societies, and payment firms are making efforts to help customers access accounts and emphasized that accounts are not being closed due to lawfully expressed political opinions. However, the FCA has requested senior leaders to take personal responsibility for ensuring compliance with rules and regulations.
NatWest faced a crisis last year after a dispute with former Brexit party leader Nigel Farage, resulting in the closure of his bank accounts with its private bank Coutts. This incident sparked political backlash and led to the departure of NatWest’s CEO and Coutts’ former boss. The FCA has also urged account providers to offer more support to those who do not have bank accounts but wish to obtain one and emphasized the importance of providers acting in accordance with their obligations.
The FCA highlighted the challenges faced by organizations like pawnbrokers, charities, and the adult entertainment sector in accessing accounts and urged firms to establish a clear definition of reputational risk. The executive director of consumers and competition at the FCA, Sheldon Mills, emphasized the need for consistent outcomes, increased awareness of suitable account options, more support for vulnerable individuals, and the avoidance of unjust denials of account access. The FCA aims to promote better practices in account provision to ensure financial inclusion for all individuals.
In response to these issues, the FCA is encouraging financial institutions to take a more proactive approach in supporting individuals and organizations in acquiring and maintaining bank accounts. By sharing examples of both good practices and areas requiring improvement, the FCA aims to foster a more equitable and inclusive financial system. The regulator’s emphasis on accountability from senior leaders and adherence to regulations underscores the importance of maintaining trust and integrity in the financial sector.
As part of its efforts to promote fair access to banking services, the FCA is working to raise awareness among account providers about the challenges faced by vulnerable groups and the need for greater support in accessing financial products. By highlighting instances of positive practices and areas for enhancement, the FCA is aiming to achieve a more balanced and inclusive approach to account provision. The regulator’s call for improved definitions of reputational risk and clearer guidelines for account access reflects its commitment to promoting financial inclusion and fairness in the banking sector.
