New reports of the reasons given for closing this politician's account beg the question of where the whole know your client (KYC) business goes from here and what the proper boundaries of action should be. Coutts has commented on the matter, which continues to cause political waves. NatWest's CEO has apologised to Nigel Farage over the affair.
(Updated with Alison Rose letter of apology, recasts lead.)
NatWest, the parent of private bank Coutts, has apologised to former UK UKIP leader Nigel Farage after a story revealed that Coutts had reportedly decided his views "do not align with our values".
Dame Alison Rose, the chief executive of NatWest, wrote to Farage over the mishandling of his account closure. In a letter, a copy of which was emailed to the media, including WealthBriefing, she said that she was sorry for the “deeply inappropriate comments” made about him in internal emails, and said they did not reflect the view of the bank.
“I believe very strongly that freedom of expression and access to banking are fundamental to our society and it is absolutely not our policy to exit a customer on the basis of legally held political and personal views,” Rose said. “To this end, I would also like to personally reiterate our offer to you of alternative banking arrangements at NatWest. I fully understand yours and the public’s concern that the processes for bank account closure are not sufficiently transparent. Customers have a right to expect their bank to make consistent decisions against publicly available criteria and those decisions should be communicated clearly and openly with them, within the constraints imposed by the law,” she said. "In addition, I am commissioning a full review of the Coutts processes for how these decisions are made and communicated to ensure we provide a better, more transparent experience for all our customers in the future."
"As previously stated, I welcome the FCA’s reviews of regulatory rules associated with Politically Exposed Persons, and we will implement the recommendations of our review alongside any changes that they or the Government makes to the overall regulatory framework," Rose added.
Earlier yesterday, a report by the Daily Telegraph (19 July) referred to a “reputational risk committee” at Coutts, stating that it “exited” Farage after considering a dossier about his comments on Brexit, his friendship with Donald Trump and views on LGBT rights as among reasons why he was not compatible with the bank's values. The dossier also referred to Farage’s friendship with Novak Djokovic, the former Wimbledon champion, as evidence that he was not as “inclusive” as the bank. (The tennis star tangled with Australian authorities over Covid vaccines.)
Media reports said that the UK Treasury has expressed concerns about the case. Speaking in the House of Commons yesterday, UK Prime Minister Rishi Sunak said that banks must protect free speech. It has been reported that legislation is being considered to give banks new free speech duties.
The matter has already sparked debate on whether rules about politically exposed persons (PEPs), for example, need to be clarified. It has also prompted claims that a form of “cancel culture,” driven by contemporary political and social concerns on areas such as gender and climate change, is seizing hold of finance.
As reported here more than a week ago, Farage, who is arguably the most prominent pro-Brexit politician in the UK, and also an advocate of strict immigration controls and critic of net zero energy policy, has objected to how his bank account was shut. Farage made a “subject access request” to Coutts asking for details on why it acted. Earlier in July, the BBC and Financial Times said his accounts were closed because Coutts said he fell below the minimum sum required.
Farage, also a presenter on GB News, had initially speculated that he could have been “debanked” because of his status as a PEP and also because of allegations made against him in Parliament by a Labour MP, Chris Bryant, who said Farage was receiving hundreds of thousands of pounds in payments from state-run Russian media (Farage denies those claims, which haven’t been repeated outside Parliament, where those making them would not be protected against libel). UK Chancellor Jeremy Hunt has also disclosed that he was unable to open an account at another bank.
In the initial reports, Farage did not identify Coutts by name, although media reports said this was the bank. The organisation is renowned as one used by the UK Royal Family, although the lender doesn’t comment on specific clients. Coutts is owned by NatWest Group, formerly known as Royal Bank of Scotland. The UK government owns almost 39 per cent of NatWest, after having bailed RBS out in 2008/09 in the financial crisis.
Reasons for action
Responding to a request for comment by WealthBriefing, a spokesperson for NatWest Group, said: “We recognise the substantial interest in this case. We cannot comment on the detail given our customer confidentiality obligations. However, it is not Coutts’ policy to close customer accounts solely on the basis of legally held political and personal views. Decisions to close an account are not taken lightly and involve a number of factors including commercial viability, reputational considerations, and legal and regulatory requirements."
The bank went on to say it welcomed UK government efforts to clarify the processes involved when a bank account is shut down.
“We recognise the critical importance of access to banking. When it became clear that our client was unable to secure banking facilities elsewhere, and as he has confirmed publicly, he was offered alternative banking facilities with NatWest. That offer stands. We understand the public concern that the processes for ending a customer relationship, and how that is communicated, are not sufficiently transparent. We welcome the anticipated HM Treasury recommendations in this area, alongside the ask to prioritise the review of the regulatory rules relating to politically exposed persons. We look forward to working with government, the regulator and the wider industry to ensure that universal access to banking is maintained.”
TalkTV, a radio and TV show on current affairs, also reported yesterday that Labour MP Jess Phillips stated that although she disliked Farage’s views, she did not feel comfortable that Farage’s account had been closed for his opinions.
Banks are often keen to promote their ESG and diversity credentials in marketing and thought leadership. Two years ago, Coutts became a Certified B Corporation, a title showing that it balances financial results with protecting the environment.
(Editor’s note: I have already given my own views on this case, and others. Given what we have now learned, it begs the question of where the whole know your client (KYC) business goes from here? Do banks, when onboarding a client, now have the right to demand that if they are PEPs or prominent in some respect, pass some sort of ideology test? People from different religious and cultural traditions who live in the UK, for example, are not all comfortable about certain gender issues. It seems odd that Brexit should figure in this. The UK departure from the EU, whatever one might say about it, was supported in a referendum in 2016 by millions of voters – a majority. There’s a lot more explaining that the banking industry needs to do. (See an analysis here about "debanking". )There may also be further pressure for legislation where the rules might be fuzzy. As always, let me know if you have comments. Email firstname.lastname@example.org)