19th July 2023
A moment of woke madness?
J Paul Getty famously said that “if you owe the bank $100 it is your problem, if you owe the bank $100m that’s the banks problem”!
I wonder how he would view the machinations of Coutts bank with Nigel Farage over the last couple of weeks?
It is said that the nine most terrifying words in the English language are “I’m from your bank, and I’m here to help!
It seems a number of banks, possibly all of them, are refusing, cancelling or closing bank accounts with no reasons given. This in turn seems to create severe difficulty for those affected individuals or organisations when trying to open an account with another bank, with refusals to do so not being accompanied, again,without any reason.
In many cases, rather like in Orwell’s 1984, those affected seem to hold particular political views or are considered to not to hold the ‘correct’ opinions. A clearer breach of FCA TCF rules would be hard to find?
A couple of weeks ago, we heard that Nigel Farage’s long held accounts at Coutts were closed for reasons now very clear and not for the original suggestion of insufficient funds, as suggested to the BBC’s Simon Jack by a source close to Coutts, to meet their banking criteria.
Coutts closed Nigel Farage's accounts because his views did not 'align with its purpose and values', a subject access report requested by him revealed.
The former Ukip leader said the 40-page dossier detailing the bank's discussions about him showed it was lying about the reason he was dropped. It revealed the 331-year-old bank's 'wealth reputational risk committee' decided to 'exit' him after considering his comments on Brexit and his links to Donald Trump and Novak Djokovic.
This situation is a Coutts cart and horses’ journey through the FCA regulatory framework of ‘Treating Customer Fairly and out the other side.
For TCF reference, here are the FCA six consumer outcomes that Coutts should strive to achieve to ensure fair treatment of their customers.
Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture. Coutts score Zero
Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly. Coutts score Zero
Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale. Coutts score Zero
Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances. Coutts score Zero
Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect. Coutts score Zero
Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint. Coutts score Zero
Where could this all lead, and how much will it cost Coutts?
Firstly, the reputational damage to the bank is beyond calculation.
The PM has recommended that Mr Farage complains to the FOS, but he cannot do that until he has firstly complained to Coutts. If he is not happy with the response, then the FOS would be the second port of call.
It seems Mr Farage has had a response last week of some sort from NatWest boss Alison Rose. I think that it will fall well short.
If he did take the complaint to the FOS and they found in his favour they can demand he is placed back in the position he was, before being de-banked, i.e., all accounts back with Coutts and not as offered by NatWest -plus compensation.
That could be significant. The FCA has confirmed that, from 1 April 2023, the award limits will go up to £415,000 for complaints referred on or after 1 April 2023.
However, add to this the reputational damage and defamation aspects plus breaches of GDPR and the failure to put this right immediately, he could see a far greater sum being awarded in the courts on top of costs and of course the fines to Coutts
Can differing opinions lead to a banking No Man’s Land?
I wrote to the Bank of England and the FCA on the 5th July under an FOI request as actions like this render those impacted as financially stateless.
I asked what action the PRA and the FCA intends to take to ensure the TCF rules are being applied by those banks?
The Bank of England has replied:
“The Bank of England’s regulatory powers extend to the responsibility for the ‘prudential’ regulation of deposit-takers (banks, building societies and credit unions), insurers and some major investment firms. As the prudential regulator, it is the Prudential Regulation Authority’s (PRA) role to promote the ‘safety and soundness’ of these firms – that is, to promote their resilience against failure, and to help ensure that they avoid causing harm through any disruption to the continuity of their provision of financial services.
The PRA works alongside the Financial Conduct Authority (FCA) creating a “twin peaks” regulatory structure in the United Kingdom. The FCA is a separate institution and is not part of the Bank of England. It focuses on the interaction between customers and financial institutions, making sure that the institutions offer a reliable and fair service to their customers. The FCA is also responsible for regulating consumer products, ensuring that relevant markets function well and for the conduct regulation.
With this being understood, your queries are best directed to the FCA. We kindly suggest that you reach out to them directly. I have provided their contact information below”.
In the 50’s and 60’s this sort of thing happened a lot with institutions, but you never got to know about it, simply filed internally under the sailing parlance of ‘not liking the cut of ones’ jib”
As yet the FCA has not responded, but we will keep you posted!
What are your thoughts? Please comment below.
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