The City regulator has said it has contacted the owner of Coutts bank amid a growing row over its decision to close Nigel Farage’s accounts, but told MPs that while lenders cannot discriminate against customers, it is ultimately up to firms to decide who to do business with.
It came as the prime minister, the home secretary and the City minister waded in to the growing debate over the rights of lenders to shut or refuse accounts based on concerns over customers’ political views.
Coutts, an exclusive private lender that caters for royals and the global super-rich, terminated its relationship with Farage earlier this year. On Wednesday, the Brexit campaigner and former UK Independence party leader released internal documents obtained from the bank, which stated it was concerned about his “xenophobic, chauvinistic and racist views” and believed maintaining his accounts posed a risk to the bank’s reputation.
The documents highlighted Farage’s ties to controversial politicians such as Donald Trump and his views on issues including migration and Russia, stating his comments “are not in line with our views or our purpose”.
The chief executive of the Financial Conduct Authority, Nikhil Rathi, told MPs on Wednesday that the regulator had spoken to the Coutts parent company, NatWest Group, and UK regulations – inherited from the EU – bar banks from discriminating against customers based on protected characteristics such as race and sex.
Speaking at a hearing of parliament’s Treasury select committee, Rathi said: “You’re not able to discriminate on the basis of political views either.”
However, the FCA chair, Ashley Alder, suggested lenders had some discretion around customers: “For banks as well as other commercial enterprises, it’s fundamentally up to them to choose who they do business with.”
In a series of interventions, ministers and Conservative MPs piled in on the controversy, with Jacob Rees-Mogg pressing Rishi Sunak to open a public inquiry during prime minister’s questions.
The British state still holds a 38.6% stake in NatWest Group, which owns the high street lender NatWest, having bailed it out during the financial crisis.
Speaking during a press conference in Warwick, Sunak said: “It’s not right for anyone to be denied financial services because they’re exercising their lawful right to free speech. That’s why the government passed laws that are being consulted on that make sure banks do deal with what are called ‘politically exposed persons’ in a proportionate way.”
The Treasury is reportedly considering increasing the notice period before banks close accounts from 30 days to three months after the row, according to Sky News.
In a Twitter post, the home secretary, Suella Braverman, accused NatWest Group of “politically biased dogma”, claiming “the Coutts scandal exposes the sinister nature of much of the Diversity, Equity & Inclusion industry”, while the City minister, Andrew Griffith, said in a tweet that financial services should not be denied to those “exercising their right to lawful free speech”.
“The privilege of a banking licence in a democracy should imply a duty not to ‘debank’ because you disagree with someone’s views,” said Griffith.
Farage has railed against Coutts for weeks, originally claiming its decision to close his account was linked to the fact he was categorised as a politically exposed person (PEP), who would be subject to additional financial crime checks. He also said this was the reason he had been denied services by nine other lenders as he tried to shift his cash.
Farage had held personal and business accounts for his media work company, Thorn in the Side Ltd, with Coutts.
A spokesperson for Farage refused to say whether he would accept an offer to become a NatWest customer.
The bank ultimately decided to cut ties with the former politician once his mortgage expired this year. Without a mortgage, Farage fell below the bank’s financial threshold, which requires its customers to hold at least £3m in savings, or borrow or invest at least £1m with the bank. It was previously reported that this was the reason the bank had removed him as a customer.
“The relationship has been below commercial criteria for some time and upon review of Nigel’s past public profile and connections, the perceived risks for the future weighed against the benefit of retention, the decision was taken to exit upon repayment of an existing mortgage,” the internal Coutts report, published by the Telegraph and Daily Mail, stated.
Everyone in the UK has a right to a basic bank account, which offers the ability to receive and make payments. However, UK banks, like most businesses, are free to deny additional services to customers if they pose a risk to their reputation.
It is considered a commercial decision but is still subject to fair treatment and equality concerns – meaning individuals cannot be denied on the basis of protected characteristics like gender or race.
The FCA’s Rathi explained to MPs that it would now be up to Farage to file a complaint with the Financial Ombudsman Service (FOS), which would take into account both the former politician’s concerns and the bank’s rationale.
Farage’s spokesperson did not immediately confirm whether he had lodged a formal complaint.
A Coutts spokesperson said the bank could not comment on the case in detail due to client confidentiality rules. “However, it is not Coutts’ policy to close customer accounts solely on the basis of legally held political and personal views. Decisions to close an account are not taken lightly and involve a number of factors including commercial viability, reputational considerations and legal and regulatory requirements.
“We recognise the critical importance of access to banking. When it became clear that our client was unable to secure banking facilities elsewhere, and as he has confirmed publicly, he was offered alternative banking facilities with NatWest. That offer stands,” the bank added.
“We understand the public concern that the processes for ending a customer relationship, and how that is communicated, are not sufficiently transparent. We welcome the anticipated HM Treasury recommendations in this area, alongside the ask to prioritise the review of the regulatory rules relating to politically exposed persons.
“We look forward to working with government, the regulator and the wider industry to ensure that universal access to banking is maintained,” Coutts said.
