The Silent Scandal of ‘Debanking’: Why Innocent Britons are paying a high price for inadequate fraud prevention

22 March 2025, 13:21

A scandal is unfolding in Britain’s financial system, and most people don’t even know about it – until it happens to them.

Every year, thousands of innocent individuals are being ‘debanked,’ which means having their bank accounts closed without explanation.

High profile victims of debanking include politicians such as Nigel Farage MP and the former Chancellor of the Exchequer, Jeremy Hunt.

However, for the silent majority without a public platform from which to challenge the organisations behind the process of debanking, reparation can be a long and difficult journey.

Debanking is usually due to fraud markers placed against an individual by agencies, including Cifas, who monitor instances of fraud and fraudulent activity and share data with the financial sector, including banks.

These markers are intended to prevent financial crime, but when applied incorrectly, they can devastate lives.

As a solicitor specialising in this area of the law, I have represented countless clients who have suffered as a result of wrongly applied fraud markers.

Their stories follow a familiar pattern: one day, they receive a letter from their bank informing them that their account is being closed. No reason is given. Attempts to open new accounts elsewhere are met with rejection.

Loans, mortgages, and even basic financial transactions become impossible, and many people only discover the reason when they challenge the bank’s decision, often at great personal cost.

These individuals are not criminals. They are students, professionals, business owners – ordinary people who have been unfairly swept up in a system that is opaque and unforgiving.

Some fall victim to fraudsters themselves, unknowingly becoming ‘money mules’ – a form of money laundering which involves receiving the proceeds of crime into a bank account and then transferring it to another account or taking it out in cash.

This rapidly growing problem affects every age group, but particularly young adults, economic migrants, and vulnerable individuals. Others have had their identities stolen or have been mistakenly flagged due to banking errors.

Yet, once a fraud marker is applied, there is little recourse. The financial sector closes ranks, and even clear evidence of innocence is sometimes ignored. The work and effort required to challenge these fraud markers is highly complex and can be a lengthy process.

Fraud is undoubtedly a major issue. A 2023 study by Crowe, the University of Portsmouth, and Peters & Peters estimated that fraud costs the UK economy up to £219 billion annually.

But while the government and financial institutions focus on cracking down, they are ignoring the human cost of wrongful accusations. Innocent people are being treated as criminals – without trial, without appeal, and with devastating consequences.

During the COVID-19 lockdown, I saw first-hand how many young people were being debanked after unknowingly acting as money mules.

This experience led me to establish the Financial Fraud Awareness Campaign (FFAC), a not-for-profit organisation dedicated to educating those most at risk. Through targeted education and training, the FFAC aims to prevent people from falling into these traps in the first place, and in doing so cut off the supply of money mules to organised criminal.

Cifas’ own data shows that 62 per cent of money mules are under 30, yet the suggested educational approach has been narrowly focused on school-age children, ignoring the large numbers of adults being caught in this web.

Furthermore, a Financial Conduct Authority report published in January 2024 revealed shocking inconsistencies in how fraud markers are applied. Among 25 monitored firms, the percentage of cases reported to the National Fraud Database varied between 6 per cent and 66 per cent.

Of the 194,084 bank accounts offboarded and closed, only 37 per cent were reported to the National Fraud Database. This suggests that even the banks themselves recognise that many so-called fraudsters are, in fact, unwitting victims.

The government, regardless of political persuasion, has long been asleep at the wheel when it comes to fraud prevention. Britain has become the fraud capital of the world, yet instead of meaningful reform, politicians have allowed financial institutions to operate with impunity, debanking thousands without proper oversight and accountability.

The solution is not more bureaucratic box-ticking or superficial public awareness campaigns. We need real, targeted education – delivered face-to-face by counter-fraud professionals, not just via generic online resources that few people engage with and which miss those most vulnerable to organised criminals.

We need consistency in how fraud markers are applied and reviewed, ensuring that people are not unfairly blacklisted – given that the ramifications can last longer than the six years such fraud markers can be loaded for. Most importantly, we need accountability from banks and financial regulators – because right now, they are acting as judge, jury, and executioner.

Fraud is a national emergency, but so is the silent scandal of wrongful debanking. How many more innocent people must have their financial lives destroyed before politicians and educators take note and take appropriate action?

Jeremy Asher is a solicitor at Setfords working with the innocent victims of debanking; an author; and Founder of the Financial Fraud Awareness Campaign.

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