Surface Ripples

Banking Blunders?

Some readers may be aware of the travails of a certain UK politician, Nigel Farage, one of the principal architects of Brexit.

Mr Farage’s account with a UK bank was closed for reasons unknown. When Mr Farage applied to other banks to open accounts, he was turned down.

This left Mr Farage without access to banking services, meaning he couldn’t:

• Receive payments.
• Get cash. 
• Pay bills.  
• Transfer funds to other people.

In short, he became an “non-person”.  

Many of us take access to banking services for granted.  They’re an essential part of daily life.  The case of Mr Farage received considerable publicity, both thanks to Mr Farage’s “celebrity” status and others coming forward with similar stories.  Speculation has been rife; facts precious few.  Mr Farage has apparently shared documents that evidence that his political views were discussed in the bank (along with his financial situation) before the bank decided to close his accounts.  One is left to judge for oneself, whether it was the political views or the financial situation that was the ultimate decider, or whether both played a part.

The BBC News reported that his account had been closed as it failed to meet the criteria for that particular type of account with the bank based on a comment by the bank’s parent’s Chief Executive, who has since resigned, as did the CEO of the subsidiary that closed the account. 

Others, however, suggest that the real reason the account was closed and that no other bank would touch Mr Farage was because of his political views, and the fact that he was one of the driving forces behind Brexit.  The latter resulted in considerable losses for the UK financial services industry and some banks may have considered this a chance to “get back” at one of the architects of their misery.

Coincidentally, it appears that others had had their accounts closed. One was a Christian vicar who objected to and wrote to his bank branch about their support of Gay Pride month. As a Christian, he has what are known as “protected beliefs”, meaning that he’s entitled to oppose homosexuality as a Christian and particularly as a Christian vicar. Whether the bank agrees with his views or not is immaterial. If this were the case, other accounts should be closed as well, resulting in considerable loss of business (and reputation!) for banks. The problem is whilst banks can close accounts, there is usually little one can do if this happens.

Fast forward to the present and the UK government have intervened and read banks the “riot act” to prevent closures of accounts without “just cause”.  The Treasury is said to be proposing new rules, with emphasis on the fact that banks’ role is to “serve customers well and fairly – not to tell them how or what to think”.

There can be good reasons for banks to close someone’s account:

• Assaulting a member of the bank’s staff.
• Poor account conduct (i.e. constantly going “into the red”).
• Being convicted of criminal activities.

In certain cases, banks won’t be allowed to explain to customers why their account has been closed, particularly if they suspect that the customer has been engaged in criminal activities, then telling them why the account was closed would “tip off” potential accomplices. However, simply closing an account because you don’t agree with the customer’s political or other views smacks more of George Orwell’s 1984, than of professional banking practice.

It would surprise me if I agreed with the views of every one of my bankers, or indeed if they agreed with mine!  There are certain views I hold which other people don’t and with which they may disagree. That’s our right as free people.  For one section of society to take summary action against somebody because they don’t agree with them is not to be tolerated in a free society.

Ironically, something not dissimilar happened to Barclays Bank, when it was finally forced to divest its stake in banking operations in apartheid South Africa, as people were refusing to do business with it.  Popular pressure from “little people” acting in unity against a “corporate bully” taking advantage of its position won the day. 

The UK government is, rightly, holding the banks to account and will be discussing with them ways for customers to obtain redress if they feel their accounts have been closed for no valid reason.

There has also been speculation that banks have been over-zealous in enforcing EU law regarding what are known as Politically Exposed Persons (PEPs) such as Mr Farage.  Indeed, the granddaughter of a former UK chancellor was refused an account because she was his granddaughter!

The purpose of the PEP law is to penalise corrupt politicians engaging in corrupt practices in corrupt (perhaps) countries, not ordinary politicians going about their day-to-day business.  Whatever the banks’ views on Mr Farage and his encouragement and support of Brexit, he was going about his lawful business and was entitled to his opinion.  As it turned out, just over 50% of those who voted in the Brexit referendum agreed with him!

Was this the proverbial social media “storm in a teacup” whipped up by a master at manipulating social media, or a genuine case of an account being closed because it didn’t meet the minimum criteria?  The UK banking industry has once again distinguished itself by its complete lack of touch with the real world. It is doubtless time that it was reminded of its place… 

I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With a wealth of international experience in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management.  I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services.   

Labels: Customer Care, Financial

posted by William Martin @ 14:13