Banks close 140,000 businesses’ accounts
UK BANKS forced the closure of 140,000 small business accounts last year, as Nigel Farage claimed “nothing had changed” since the debanking crisis.
New figures from the Commons’ Treasury select committee show that 2.7pc of 5.3m small business accounts were shut without consent last year, fuelling fears of banks being overzealous with financial crime regulations.
Mr Farage, the former Ukip leader, whose battle with Natwest subsidiary Coutts sparked scrutiny over debanking last year, said the statistics showed lenders had failed to change their ways.
“Having seen this number it appears to me that nothing has changed,” he said. “I don’t see any change of culture. The effects on small business can be utterly devastating. To open a new small business account can very often take months. We are now living with a banking process that discriminates against small businesses and discriminates against businesses that take cash.”
Data collected from Barclays, HSBC, TSB, Lloyds, Santander, Natwest, Metro and Handelsbanken show there were 141,620 “bank-initiated” closures of SME accounts between January and November last year.
MPS on the committee are investigating whether small businesses are finding it hard to access bank services.
Harriett Baldwin, the committee chairman, said: “One of the most startling pieces of evidence emerging from our inquiry into access to finance for small and medium-sized business is the readiness of lenders to close business bank accounts with little or no notice. Our committee believes that any company engaged in a legal business activity in the UK should be able to find a bank to offer them a bank account.”
She said many of the debanking decisions may be happening informally, with no industry-wide standard available to record why SMES have had their accounts closed. Fears are growing that lenders may be too risk-averse on financial crime rules.
The Telegraph recently reported on a spate of bank-initiated closures, including the suspension of accounts held by a church, deaf and blind charities and a GP surgery. Banks are under constant pressure from regulators to tighten anti-money laundering rules. Most of the account closures uncovered by the committee, which will quiz Bim Afolami, the City minister, on the findings today, were owing to financial crime concerns.
Natwest, the biggest bank for SMES, said 97pc of the 21,000 accounts closed were because of concerns about financial crime. Lloyds said three quarters of the 8,115 closures were linked to economic crime concerns or the need to ensure regulatory compliance.
Mr Farage said that while the regulations were “well-intentioned”, they were now being “over-interpreted in a way that hurts innocent, ordinary people”. He added: “If they see an unusual payment, rather than having to go through extensive compliance, they just close the account.”