City watchdog has whitewashed the debanking scandal
City watchdog admits it didn’t examine Farage case in ‘debanking’ review
The Financial Conduct Authority (FCA) published a report this week claiming that UK banks and financial institutions did not close customer accounts primarily due to political views between July 2022 and June 2023. However, the review has faced criticism for not including an examination of Nigel Farage’s high-profile case of alleged debanking over his Brexit stance.
Farage, former leader of the Brexit Party and prominent pro-Leave campaigner, had his bank accounts with Coutts closed earlier this year. Coutts claimed Farage’s political views were contrary to the bank’s values and accused him of being “xenophobic and racist.”
The FCA admitted that Farage’s situation was not part of their debanking review, as regulators are looking into it separately. An FCA spokesperson said Farage’s case “fell outside of the reporting period” covered. The review focused on account closures between July 2022 and June 2023. Farage’s Coutts accounts remain open after the bank eventually reversed its decision to close them following public backlash.
Critics have called the FCA’s report a “whitewash” for overlooking such a prominent alleged case of debanking over political opinions. Farage himself dismissed the review as a “joke” on Twitter, since the debanking concerns stemmed from his high-profile situation in the first place.
The FCA said it examined eight cases where “expression of political or any other opinions” were suspected as the reason for account closure. However, regulators concluded this was not the primary reason in any of the cases. Instead, offensive customer behavior, including using racist language against staff, was cited as the main factor leading to debanking.
While claiming no accounts were closed primarily due to political beliefs, the FCA admitted the data was “gathered at speed” and requires further verification. Regulators say additional work is needed to confirm debanking is not occurring over political stances and opinions.
The report has fueled the ongoing heated debate regarding access to bank accounts and firms’ risk management policies. It raises questions around whether individuals and organizations should have the right to an account by law, as seen in some other countries.
Farage’s Case: A Saga of Debanking Allegations
The FCA’s debanking review provides an incomplete picture without examining Nigel Farage’s high-profile allegations of having his accounts closed over his Brexit stance. In early 2022, it emerged that Farage had received notice from Coutts that they planned to terminate his bank accounts. Coutts, part of the NatWest Group, is known for serving wealthy clients like the Queen.
Farage said he was given just 60 days notice and no proper explanation for the bank’s decision. He claims Coutts told him his political affiliations meant he was no longer “aligned with our values.”
The situation triggered a crisis at NatWest Group. It emerged the bank’s CEO, Dame Alison Rose, had been the source behind an inaccurate BBC story about Farage’s account closure being for commercial reasons. Rose resigned in July 2022 after admitting she was personally responsible for the misleading story. Coutts CEO Peter Flavel also resigned over the scandal of Farage’s debanking allegations.
NatWest launched an internal review into the decision to close Farage’s Coutts accounts. In July 2022, Farage said Coutts had reversed course and offered to keep his accounts open. Farage’s case sparked wider concerns that debanking was happening to politically affiliated customers across the sector. It led directly to the FCA’s review of account closures published this week.
Critics argue that excluding Farage, the most prominent alleged victim of debanking, renders the review futile. Farage called the FCA’s report “a whitewash” on Twitter and reiterated that Coutts clearly told him his political stances drove their decision. With Farage’s case still ongoing as NatWest probes his allegations internally, it fell outside the scope of the FCA’s review timeframe. But campaigners say that overlooking the scandal at the heart of debanking fears makes the watchdog seem oblivious.
FCA Denies Political Debanking But Admits Data Limitations
The FCA stands by its finding that no accounts were closed primarily over political opinions based on data from firms. But it admits there are limitations to the information gathering process. Regulators asked banks, building societies and payments companies to report cases where politics seemed to be a factor in account closures. It received data on 70 situations for further investigation.
This found eight cases where expression of political or other opinions was suspected as playing a role. In none of these eight cases did the FCA find any evidence that politics was the main driver behind the closure. Other reasons cited were non-political social media posts, use of racist/offensive language and general anti-social behavior. Customers’ overall conduct was deemed the primary cause of account termination.
While denying politics drove closures, the regulator concedes its findings rely on data that is not fully comprehensive. The information was self-reported by firms “at speed” within a short timescale. The FCA says further work is required to verify the accuracy and completeness of the data provided about account closures. It aims to ensure debanking over political views is not occurring under the radar.
Critics argue this shows the data is clearly incomplete if the watchdog needs to corroborate it. Farage said the “admission they have conducted a review without investigating any specifics sums it up.”
Access to Banking Debates Reignited
The FCA’s report has catalyzed fresh debates about access to banking and potential curbs on firms’ account closure powers. Some campaigners and politicians argue individuals and organizations should have a legal right to basic banking services – as seen in France, for example.
They say leaving it to banks’ discretion creates situations where lawful political groups or beliefs can be discriminated against through account closures. Others counter that compelling firms to provide accounts against their will seems disproportionate. It could force banks to serve customers or entities that pose legal, regulatory or reputational risks.
Critics of mandating banking access point to sectors like crypto – where exchanges and startups struggle to open accounts due to perceived money laundering risks. UK regulators are separately reviewing the current “politically exposed persons” (PEP) regime regarding enhanced due diligence on politically affiliated clients.
Campaigners hope this may provide ways to stop lawful organizations being “debanked” over political associations without proper justification. The debate highlights challenges balancing non-discriminatory access to accounts with letting banks manage risks. There are no easy regulatory solutions, but ignoring alleged cases like Farage’s achieves little.
Farage and Brexit Allies Cry Foul
For Nigel Farage and his Brexit Party allies, the FCA’s report is a whitewash that fails to engage with alleged partisan debanking. Farage said his Coutts case “triggered the crisis, led to resignations and exposed the scandal.” In his view, overlooking it renders the review “a joke.”
Richard Tice, former Brexit Party chairman, agreed that Farage’s situation “directly led to the FCA even doing this report.” He argued the watchdog’s claim no political debanking occurs is therefore “simply not credible.”
Pro-Brexit groups argue Farage’s case exposed the strength of anti-Brexit bias in the banking sector. They claim the FCA ignoring this case shows establishment prejudice remains strong. However, some suggest Farage and his allies are exploiting his Coutts case to cast themselves as victims. Banks assert Farage’s conduct posed reputational risks beyond his politics.
Despite Brexit having occurred, Farage and Reform UK continue campaigning against aspects of EU integration in the UK. The FCA report fuels their narrative of battling establishment biases, but offers no evidence of systematic political discrimination in account closures.
What Comes Next in the Debanking Saga?
The FCA’s report is unlikely to resolve concerns that lawful political groups could be excluded from banking services without recourse. Nigel Farage’s Coutts case will continue to cast a shadow until fully resolved.
UK Finance, representing major banks, said the report confirms “there are appropriate controls in place” regarding account closures. But it added that firms recognize the need to protect access for lawful organizations.
On Farage’s case specifically, NatWest is continuing to conduct an internal probe into the decisions made regarding his Coutts accounts. Its findings will be pivotal in determining whether politics played an unjustified role.
Regulators plan to refine their data gathering and analysis methods to provide a clearer view of debanking risks in future. But they stress most closures have valid reasons beyond political factors.
For now, the FCA’s report dampens but does not extinguish concerns that lawful political stances could lead to debanking. Farage’s allegations will remain a thorn in the issue unless definitively settled by NatWest’s ongoing investigation.
The coming months will determine whether the FCA can provide conclusive assurance that political discrimination is not affecting account access at major UK banks and financial firms.