What are the UK rules on access to banking and how are disputes settled? | Banks and building societies

As the storm over the closure of Nigel Farage’s bank accounts at the private lender Coutts grows, here we look at the UK rules on the right to be banked and how account holders can complain if they feel they have been treated unfairly.

What rights do I have to a UK bank account?

Under the payment accounts regulations, everyone in the UK has a right to hold a basic bank account offering the ability to receive and make payments.

However, UK banks, like most businesses, are free to deny additional services to customers for a number of reasons, including suspicions over financial crime. Lenders can also choose to close or refuse an account if they believe customers pose a risk to their reputation. This was apparently one of the key reasons Coutts decided to shut Nigel Farage’s account.

Farage used a subject access request to obtain internal documents detailing the decision. It showed the bank was concerned about his “xenophobic, chauvinistic and racist views” and believed maintaining his accounts posed a reputational risk. The report highlighted Farage’s ties to controversial politicians such as Donald Trump, and his views on issues including migration and Russia. It said some of Farage’s comments were “not in line with our views or our purpose”.

It is important to note that Farage has not, as he claims, been “debanked”. He has been offered a standard account at Coutts’ sister bank, the high street lender NatWest, and he has so far refused to confirm whether he plans to take up the offer.

What does this mean for me? Can banks close customer accounts at any time?

Reputational risks are considered to be part of banks’ commercial decision-making but are subject to fair treatment and equality concerns, meaning individuals cannot be denied services on the basis of protected characteristics such as gender or race. The City regulator, the Financial Conduct Authority (FCA), confirmed that the rules, which have been inherited from the EU, cover people’s political views.

Those rules, which came into force through the 2015 payment accounts regulations (PARs), gave people in the UK a right to have a basic bank account and detailed protections against discrimination.

The legislation, which predates Brexit, states that “a credit institution must not discriminate against consumers legally resident in the European Union by reason of their nationality or place of residence or by reason of any other ground referred to in article 21 of the charter of fundamental rights of the European Union when those consumers apply for or access a payment account”.

The charter states: “Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.”

The matter is a bit more hazy if a lender argues that an individual’s opinions do not align with its values or purpose. The FCA’s chair, Ashley Alder, told MPs on the Treasury committee on Wednesday that “for banks as well as other commercial enterprises, it’s fundamentally up to them to choose who they do business with”.

He said he was “not aware of anything in the FCA rulebook that goes to the point around how banks judge their own attitude to reputational risk, if that’s what it comes down to”.

Has this happened before?

Yes. Reputational concerns have resulted in account closures for individuals and business involved in sex work, or pornography and adult entertainment industries, as well CBD and cannabis-related companies.

In 2021 it emerged that OnlyFans, the online subscription platform known for hosting adult content, had had its company accounts closed at the UK-based Metro Bank and had run into trouble with the US lender BNY Mellon, which started flagging and rejecting cash transfers.

OnlyFans later said it had reached a new agreement with its lenders and payment providers, but others in the industry have not been so lucky.

What recourse do I have if I believe I have been treated unfairly?

If a customer believes they have been discriminated against or treated unfairly by their bank, they can file a complaint with the Financial Ombudsman Service (FOS).

The FOS will take evidence from the customer and the bank before making a decision. Its ruling could force the bank to correct its mistake, which could mean reinstating an account, and even pay the customer compensation.

The process could take months, with the initial assessment alone lasting up to 90 days. If it is a complex complaint or if either party disagrees with the initial assessment, the matter will take longer to settle.