Senior executives at some of the UK’s biggest banks risk losing their jobs if they de-bank customers because of their political views, the City minister has warned.
Speaking to Financial News after a meeting with the UK’s biggest lenders on 26 July, Andrew Griffith said that decisions over which clients to cut ties with are “a question of leadership”.
“The tone at the top matters,” he said. “Ultimately if these decisions are being made to de-bank based on political views, that is wholly unacceptable and ultimately an issue of leadership.”
How banks treat high-profile clients has received significant attention after former UKIP leader Nigel Farage was de-banked from Coutts. The decision led to the resignation of Dame Alison Rose, the boss of parent bank NatWest, on 26 July.
A host of leading banks, including HSBC, Nationwide, Santander, Barclays and Lloyds were summoned to meet with the government to discuss how they deal with so-called politically exposed persons. NatWest’s CEO of retail banking, David Lindberg, was in attendance.
“I was very clear with the sector once again about the government’s unequivocal position about not de-banking people because of what they’ve said,” Griffith told FN. “There was good support for that; it is a clearly accepted point.”
READ Coutts’s closure of Nigel Farage’s account triggers spotlight on banking licences
Coutts’ decision was not made “solely” on the basis of political and personal views, the bank said after Farage publicly criticised the move to exit him earlier this month.
Documents from the bank’s wealth reputational risk committee released to Farage under freedom of information laws show that his mortgage with the bank was coming to an end, and therefore he would become commercially unviable as a client.
Coutts only deals with customers that have £1m in investments or borrowing or £3m in savings.
“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 committee wrote.
Farage was “seen as xenophobic and racist” the committee noted.
While she was still NatWest CEO, Dame Alison apologised to Farage for “deeply inappropriate comments” made about his political views by the committee and offered him “alternative banking arrangements”.
She resigned after admitting a “serious error of judgement” in briefing a BBC journalist about the affair.
“Everyone accepts there is a balance particularly as it relates to economic crime,” Griffith said. “There’s no disagreement on the core principle. No one is saying that their reputation is managed better by de-banking people for their political views.”
On 20 July, the government announced that banks would be forced to explain any decision to close an account and give 90 days’ notice under new rules designed to protect freedom of expression.
Griffith said that institutions were already working through the practicalities of how they exit clients and extend notice periods. Banks will have further discussions with the Financial Conduct Authority and other crime bodies, he added, while the City minister will be meeting with more industry participants to deliver a similar message.
“We are going to bring forward new regulations,” he told FN. “It’s not a question of if, it’s when.”
FCA executive director for consumers and competition Sheldon Mills said on 25 July that the watchdog had raised its concerns with NatWest and would decide if further action was necessary after a review.
“We made clear our expectation that these issues should be independently reviewed,” he added. “It is vital that the review is well-resourced and those conducting it have access to all the necessary information and people in order to investigate what happened swiftly and fully.”
Since leaving frontline politics, Farage, a former commodities broker, has set up a financial newsletter, Fortune and Freedom, that has been criticised by many financial advisers for promoting bets on risky investments like gold and silver. He has said he does not want to re-enter the political arena on the back of the attention surrounding the affair.
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