July 23, 2024

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Nigel Farage cautions banks about shutting down customer accounts.

The Culture Secretary, Lucy Frazer, has expressed concerns about banks potentially closing customer accounts for political reasons, following allegations made by Nigel Farage, a prominent Brexiteer. Frazer stated that banks should carefully consider this issue. Farage recently claimed that his bank had closed his accounts, which he interpreted as an act of “serious political persecution” by an anti-Brexit banking industry. The government is currently investigating payment providers regarding account closures.

In a similar incident last year, PayPal temporarily closed the accounts of Toby Young, the general secretary of the Free Speech Union. However, the accounts were later reinstated by the US payments company. In response to such instances, the government initiated a review of payment services regulations, specifically addressing the practise of companies seemingly closing the accounts of individuals or businesses that hold differing views from the lender.

During an interview with LBC, Frazer expressed her concern that individuals’ accounts may be closed for inappropriate reasons, emphasising the need for banks to carefully consider their actions. Farage revealed that his bank, believed to be Coutts, informed him two months ago about the closure of his personal and business accounts. He speculated that this decision might be related to regulations concerning politically exposed persons (PEPs), who are individuals in influential positions susceptible to corruption or bribery. Banks are required to conduct extra due diligence on PEPs.

Farage claimed that his bank justified the account closures as a “commercial decision.” UK Finance, which represents the banking industry, stated that lenders should engage in discussions with customers regarding account closures whenever possible and permissible. Valid reasons for closure include breaches of terms and conditions, abusive behaviour, or directives from regulators, government bodies, or law enforcement agencies.

Farage disclosed that he approached seven other banks to open new accounts but was rejected by all of them. He believes that there are additional factors contributing to his bank’s actions. Security Minister Tom Tugendhat, speaking in the House of Commons, expressed his strong disapproval of account closures on political grounds, should these allegations prove true.

The government consultation on payment services regulations is expected to conclude within the next few weeks, providing further insights into this matter.