Natwest, HSBC, Lloyds face rules change in regulatory shake-up
A number of Britain’s top lenders will on Tuesday face a rules overhaul relating to regulations around de-banking customers.
HSBC, Natwest and Lloyds are among the lenders that will have to comply with the new changes that are expected to afford customers improved protections when accounts are closed.
New rules – which will come into effect from April 28 – dictate banks and payment service providers must give at least 90 days’ notice before terminating a payment service. This is up from the previous two-month requirement.
Customers will have more time to challenge decisions if they believe their account was wrongly closed. Banks will also have to provide a clear explanation to customers in writing so they are able to challenge this through the Financial Ombudsman Service.
De-banking refers to when banks opt to close or refuse to open specific customers, usually due to their own regulatory restrictions. It can apply to both businesses and individuals.
De-banking scandals rock political system
High profile cases of de-banking have dominated headlines in recent years, most notably the infamous case of Nigel Farage and Natwest.
Farage’s debanking scandal led to the resignation of Natwest boss Alison Rose after Coutts – a private bank part of the Natwest group – identified the politician as a politically exposed person (PEP).
PEPs refer to those who hold public office and as a result are subject to extra due diligence by financial firms. Farage has said his account was shut down unfairly because the bank disagreed with his personal and political beliefs.
On the other side of the pond, political de-banking scandals have ramped up. In January, Trump blasted JP Morgan, for “incorrect and inappropriately” discriminating against him after the President alleged America’s biggest bank stopped offering him services after the Capitol riots on 6 January.
When announcing the new rules in the UK, the Labour party said they would help give customers greater time to dispute closures and secure alternative banking arrangements.