Ordinary people offered ‘no lifeline’ in debanking scandal, says lawyer

The UK’s financial regulator has been accused of focusing on “debanked” politicians while moving more slowly on helping around 340,000 other people whose bank accounts have been closed in the past year.

On Tuesday the Financial Conduct Authority (FCA) announced a review of how banks have treated UK politicians, saying it will take “prompt action” on any “deficiencies” it finds.

The announcement follows the political uproar over former Ukip leader Nigel Farage’s claims that he lost his account at exclusive private bank Coutts for political reasons.

The FCA is also carrying out a wider review of banks’ reasons for closing accounts, and is due to provide an initial assessment later this month.

But lawyer Jeremy Asher, who focuses on debanking, accused the FCA of operating a double standard in moving more swiftly to help politicians than ordinary people who have lost their bank accounts.

He said: “The FCA is reportedly going to take swift action when it comes to investigating why politicians’ bank accounts have been closed, but is offering no lifeline of help to the potentially thousands of ordinary innocent people who have been victims of debanking.

“This feels like a case of one rule for the political elite, who have a direct line to FCA CEO Nikhil Rathi, and another rule for everyone else, who currently have nowhere to turn to.”

Mr Asher, a senior regulatory consultant at law firm Setfords, has previously expressed concern that increasingly risk-averse banks are using artificial intelligence to close the accounts of people whose details appear on fraud risk databases but may have done nothing wrong.

He added: “Let’s put this into context. Some 340,000 accounts have been closed by banks with little or no warning in many cases.

“Politicians – or PEPs (politically exposed people) as they are referred to – make up less than 1% of this number, and among the other 99% there are many, many people who have done nothing wrong at all and whose financial worlds are in turmoil. Sadly, these people are contacting me for legal help every day.”

Banks rely on a small number of privately-run databases to review whether an account-holder presents a risk of fraud.

But while the entries in these databases are supposed simply to indicate where further investigation is necessary, Mr Asher said some banks are using AI tools to rule out anyone whose data appears on the list, even if further inquiries might reveal they are innocent.

He added that, in some cases, people’s data has been erroneously uploaded.

“That is why I am calling on the FCA to force banks to adhere to a strict and transparent code of conduct for everyone with respect to bank account closures,” he said.

“It’s not just politicians and those with celebrity leverage whose rights need protection, consumers’ rights are currently not protected at all when it comes to debanking.

“Further, the UK Government, and specifically Chancellor of the Exchequer Jeremy Hunt, need to revisit the FCA’s remit and consider expanding it to include oversight of the activities of the fraud marker database operators who are behind the majority of these account closures.”

Part of the code of conduct Mr Asher is calling for would require banks to give customers a “specific, contestable reason” for closing their account and provide a clear way of appealing against a closure.

In a letter to the Chancellor in early August, FCA chief executive Nikhil Rathi said: “We support the Government’s plan to further increase the required notice period for closure of accounts from 60 days to 90 days and will work with the banks and building societies to ensure effective implementation and, once the amended legislation comes into force, take action where this is not happening.”