More than a million bank accounts have been shut since 2019 – and the rate of closures is accelerating, The Mail on Sunday can reveal.
Figures obtained under a Freedom of Information request show that banks are on track to smash the previous record of 343,500 accounts closed last year.
The alarming news comes amid the continuing fall-out from the Nigel Farage affair.
NatWest boss Dame Alison Rose was forced to quit her job last month over the closure of the former Ukip leader’s account at Coutts – the lender’s private banking arm – partly because of his political views.
Banks can shut accounts with as little as 14 days’ notice if they suspect it is being used to launder money, which would leave innocent customers financially stranded.
Banks can shut accounts with as little as 14 days’ notice if they suspect it is being used to launder money [File image NatWest Bank]
The Government plans to introduce new rules to give customers up to 90 days to challenge closures.
Banks will also have to explain why accounts have been closed. But campaigners and victims claim this is unfair to the thousands of innocent customers who have been debanked despite doing nothing wrong.
‘I think the legislation should go further and limit banks to closing accounts only when there is clear evidence of criminal activity,’ said James Daley, founder of campaign group Fairer Finance.
The debanking data shows that so far this year almost 200,000 bank accounts have been axed because of concerns over financial crime activity such as fraud and money laundering.
The rate of account closures has exploded from under 50,000 in 2016 when the Financial Conduct Authority (FCA), the City regulator, introduced new reporting rules.
These require almost 250 lenders to submit an annual return of account closures.
The FCA said more monitoring by banks may explain some of the recent spike in shutdowns.
But experts say banks have become too risk-averse and rely too much on artificial intelligence to investigate and flag fraudulent behaviour.
‘There has been a dumbing down of standards in the past 12 months or so, and many of those affected are in fact innocent of wrongdoing,’ said Jeremy Asher of law firm Setfords. The Mail on Sunday is calling for banks to adopt the Government’s plans immediately, and extend them to cover both personal and small business accounts, including charities.
NatWest boss Dame Alison Rose was forced to quit her job last month over the closure of the former Ukip leader’s account at Coutts
Most bank accounts are closed for financial crime reasons. But Chancellor Jeremy Hunt last week ordered the FCA to investigate the scale of closures because of customers’ political views.
Mr Hunt, who was refused a bank account at Monzo because of his public profile, said he was concerned that the practice might be more widespread than he had thought.
‘The reason I’m worried is because free speech is a fundamental right,’ he added.
There are an estimated 90,000 so-called ‘politically exposed persons’ – including MPs, peers and judges – who are subject to stricter check by banks because they are deemed to be at higher risk of exploiting their position for private gain.
