In recent years, UK banks have faced mounting criticism and public outcry as they continue to close a staggering number of accounts daily, surpassing 1,000, according to data obtained through a freedom of information (FoI) request made to the Financial Conduct Authority (FCA). The revelations have ignited a fierce debate over the controversial practice of “debanking,” with UKIP leader Nigel Farage spearheading a call for a royal commission to investigate the matter. The alarming statistics highlight a worrying trend, with the number of accounts closed by banks witnessing a dramatic surge since 2016-17.
During that year, just over 45,000 accounts were shut, but this figure has since skyrocketed to a staggering 343,000 accounts in 2021-22, equating to more than 1,000 accounts being shut down on every business day of the week. The most troubling aspect is that many affected account holders received no prior information or explanation for the sudden closures. The issue has garnered nationwide attention, with Nigel Farage himself being caught in the crossfire of this financial storm. Farage shared his personal experience as his own bank account was one of those abruptly shut down. He expressed solidarity with those affected and vowed to champion their cause through a website campaigning against such unjust practices.
The controversial aspect of “debanking” extends beyond individuals, with some UK politicians also falling victim to this trend. An estimated 90,000 individuals, including several UK Members of Parliament, have been categorized as “politically exposed persons,” leading banks to turn them down. Grant Shapps, the UK energy secretary, shared his own harrowing experience of being debanked due to his political exposure. He recounted how one bank demanded a staggering 18 years’ worth of payslips before considering him as a customer, shedding light on the extreme measures taken by financial institutions.
In response to mounting pressure and public concern, the Financial Conduct Authority (FCA) acknowledged the increase in account closures and attributed it partly to banks’ heightened monitoring efforts in tackling financial crime. The FCA emphasized that the total number of customers affected for financial crime reasons is less than 0.2%, indicating the broad scope of the issue at hand. As the controversy rages on, the UK government has stepped in with plans to amend rules surrounding bank account closures. One major proposal entails a requirement for banks to provide extended notice periods before shutting down accounts.
This measure aims to afford affected individuals and businesses ample time to seek alternative financial solutions and prevent further upheaval. While the FCA’s explanation suggests legitimate reasons behind the surge in account closures, critics argue that it leaves thousands of innocent individuals and businesses in financial turmoil, with lives being upended due to abrupt debanking. The push for a royal commission, spearheaded by Nigel Farage, underscores the urgency of addressing this growing “debanking” scandal and finding fair solutions that protect both the banking sector and its customers.