The rules regarding “threshold conditions” will be changed to ensure banks are upholding their current legal duties to protect freedom of speech.
The shake-up was announced by Chancellor Jeremy Hunt at the Conservative party conference. Under the new rules banks will be forced to show exactly how they are protecting customers’ freedom of speech and they must take existing obligations not to discriminate “seriously”.
The government said the rules will give regulators the green light to take “firm action” if any bank is found to undermine or fails to protect the rights of their customers.
A public consultation will be launched shortly to consider how these changes are best delivered, before legislating next year, as part of the government’s aim to put an end to debanking for freedom of speech reasons.
Tough new rules despite FCA findings
The move follows on from the banking scandal in July which saw the CEO of NatWest Group, Alison Rose, step down from her position after admitting she was the source behind an inaccurate BBC inaccurate story regarding the closure of Nigel Farage’s bank account.
Following this, the Government stepped in and said it would introduce new rules over fears that banks are terminating accounts because they disagree with someone’s political beliefs. These include the notice period to close an account increasing to 90 days, from 60, and banks having to spell out why they are terminating a bank account.
However, a report by the FCA last month found that not a single account was closed in the past year primarily due to a customer’s political views. There were four cases and four complaints relating to “expression of political or any other opinions” as the reason for the account closure or complaint. But when the FCA delved further, this wasn’t the primary reason, rather customer behaviour, such as racist language directed at staff.
According to the regulator, the most common reasons for closing, suspending or declining an account was because it was inactive/dormant or because there were concerns about financial crime.