Falling bank branch numbers and reports of account closures have put access to banking in the political spotlight. Banking access affects people and local organisations and it is a common source of constituent casework for MPs.

Bank account closures

In June 2023, the bank Coutts closed Nigel Farage’s bank account after raising concerns about his political views. The scandal prompted the UK’s financial services regulator, the Financial Conduct Authority (FCA), to review account closures and led the government to propose draft regulations to further protect consumers.

But ‘de-banking’ extends beyond politicians and public figures. For example, a Treasury Committee inquiry found that eight UK banks closed over 140,000 small businesses accounts in the first 11 months of 2023.

The FCA says this is often because banks have to close accounts when unable to conduct “know your customer” checks required by money laundering regulations, or are concerned about accounts potentially being used for financial crime.

But there is concern about how banks interpret these rules and although large banks have to offer a basic bank account to individuals, this doesn’t apply to organisations. This can leave organisations with no bank account access at all.

In March 2024 the government published proposals requiring banks to give 90 days’ notice before terminating an account and to fully explain the reason for doing so. But these measures would not compel them to change how they make decisions about account closures.

Individuals and small businesses who feel they have been de-banked unfairly can complain to the Financial Ombudsman Service if unsatisfied with how their bank deals with their complaint.

Access to cash

The number of bank branches and cash machines (see chart) has been falling over the past decade, as consumers increasingly use online banking and digital payments. However, this risks financially excluding people who rely on cash, who are overrepresented among older people and people in poor health.

The banking industry and the government have taken steps to protect access to cash. For example, the ATM network LINK, which is run by banks, sets higher fees for withdrawals from isolated and low-use ATMs, to make running them more attractive to ATM operators.

LINK also runs access to cash reviews when banks plan closures or if local residents ask for a review, which can result in new ATMs or banking hubs. Banking hubs provide face-to-face banking services and are operated by the Post Office.

The Financial Services and Markets Act 2023 gave the FCA powers to protect access to cash (though not wider banking services). Following this, the FCA consulted on rules to make cash access reviews a legal requirement and could widen the number of areas eligible for new services. It intends that these rules will be in force by the end of 2024.

Further information

Author: Abbas Panjwani

Photo Credit: Cash machine by dglimages. Licensed by Adobe Stock id=511481455

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