The issue of Account closures took on a political dimension following Farage’s assertion that his account with Coutts, a subsidiary of NatWest, was terminated due to his political stance. This led to a controversy that culminated in the unexpected resignation of NatWest’s CEO, Alison Rose.
In response, Finance Minister Jeremy Hunt announced in October his intention to amend the legislation to prevent banks from shutting down accounts solely based on disagreements with the account holder’s political opinions.
The draft law issued by the finance ministry emphasises that “customers should not have their payment services discontinued for reasons tied to their lawful freedom of expression, such as political beliefs.” Under the new legislation, financial institutions must extend the current two-month notification period for Account Closure to 90 days and are obliged to offer a “detailed and specific explanation” to the customer.
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The proposed rules also stipulate that banks cannot include terms in customer agreements, allowing them to bypass these new stipulations. Nevertheless, banks would be exempt from these notification and explanation requirements if the account closure is related to concerns about money laundering or terrorism financing.
The UK Parliament anticipates passing these new regulations before the summer and implementing them as swiftly as possible.
The finance ministry noted that while reviewing these regulations was prompted by issues related to services for retail customers, the broader challenge of debanking existed before the Farage case. Consequently, the government has decided that the reforms to the rules on contract termination should apply to all providers of payment services.
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