Populist politician Nigel Farage, former leader of the UK Independence Party (UKIP) and then of the Brexit Party, shared a video on Twitter on 29 June 2023, portraying himself as a victim of politically motivated de-banking. Mr Farage alleged that his account with an unnamed commercial bank, later identified as the private and exclusive Coutts Bank, which is headquartered at number 440 in London’s Strand and dated back to 1692, had been closed without his consent some months earlier. Ten other unnamed banks had also turned him down. The widespread moral outrage and indignation that followed this announcement led the media, the government, Conservative MPs, other political leaders, and many members of the public to rally in support of Mr. Farage.
Dame Alison Rose, chief executive of the NatWest Group, stepped into the fray, rather unwisely, and discussed Mr. Farage’s banking arrangements with BBC business editor Simon Jack at a charity dinner on 3 July. She informed the journalist that Nigel Farage no longer fulfilled the requirements for a bank account with Coutts, having fallen short of the financial threshold of £1 million in investment. This information was soon in the public domain, courtesy of the BBC. As it turned out, this was inaccurate, as determined by the contents of a 40-page dossier released by Coutts in response to a subject access request by Mr. Farage. It appears that Coutts, a part of what some described as the “woke” NatWest banking group, had determined that Mr. Farage was indeed a “politically exposed person” whose beliefs and actions were inconsistent with the bank’s “values.” He was, however, been offered a standard bank account with NatWest to compensate for closure of his Coutts account, but only after going public. This damning disclosure was followed by the inevitable bloodletting. Dame Alison Rose announced her resignation on 26 July, the day after she admitted a “serious error of judgement” in the way she had breached confidentiality in discussing details of Mr. Farage’s Coutts account with a third party. The next day, Peter Flavel, chief executive of Coutts, followed suit, admitting “ultimate responsibility” for the whole fiasco. On the day of Alison Rose’s resignation, shares in NatWest (in which the UK government holds a 38.6 percent stake) fell by 3 percent, removing £650 million from the bank’s valuation.
De-banking, or de-risking, refers to the withdrawal of banking and other financial services by banks or other financial service providers when it is decided that either an individual, or various entities such as money service businesses, non-profit organisations, foreign embassies, or even political parties, somehow pose a “high risk” to a bank’s integrity and reputation. Financial exclusion can be detrimental to those affected as it restricts the ability to manage cash flows, to invest capital and to access credit.
Access to banking services can indeed be considered a human right, which applies, albeit with qualifications, even to people with a poor credit history. Banks and other financial institutions are also subject to equality law, which prohibits unlawful discrimination against people with protected characteristics. But there are some caveats. Individual banks, whether public institutions or in private hands, are not obliged to open or maintain accounts with high risk individuals or entities, which may include politicians with extremist views, potential terrorists, drug traffickers and others with links to organised crime, those suspected of money laundering or other financial fraud, and people unable to prove their identity or immigration status. They do not have to provide a written explanation to justify their decision, although this may change in future. Coutts is an elite financial institution and can select its “exceptional clients” with great diligence, considering both their high net worth as well as wider reputational risks to the bank, before taking them on. But there can be no question that the public discussion of Mr. Farage’s bank account has violated bank-client confidentiality and was handled most unprofessionally. He has indeed been vindicated in his efforts to challenge the might of Coutts and its parent NatWest banking group. It is hoped that-to quote a cliché-lessons will be learned, and maybe similar situations will be handled differently in the years to come.
Ashis Banerjee