Bosses of UK banks reveal the reasons why thousands of customers were debanked

By Staff

They insist that most closures were because accounts were dormant

Some of the UK’s biggest banks have admitted to closing more accounts last year than in 2022.

They insist that most closures were because accounts were dormant and not due to concerns about a customer’s reputation. The four high street lenders were questioned by MPs on the Treasury Committee about various issues affecting the banking sector.

When asked about debanking, NatWest, Santander and Barclays revealed that they had been conducting an extensive programme to update customer information. This has led to many inactive or dormant accounts being closed.

Santander UK’s boss, Mike Regnier, disclosed that the bank closed 37,000 accounts last year, with the “vast majority” being due to this programme. Paul Thwaite, the boss of NatWest, informed MPs that most of its account closures are due to fraud or financial crime. He added that only an “absolute minority” involve concerns about the customer’s reputation.

This issue came into focus last year when Nigel Farage accused Coutts, owned by NatWest, of trying to close his account because it disagreed with his political beliefs. This sparked a broader discussion about the powers banks have to close personal and business accounts and their reasons for doing so.

Vim Maru, the chief executive of Barclays UK, was among the bosses who emphasised that they do not close people’s accounts “based on political beliefs and personal characteristics”.

Barclays, Santander, Lloyds and NatWest also called on social media platforms to do more to tackle fraud. Mr Thwaite revealed that over 80% of fraud starts on social media platforms, saying: “Banks can only do so much but we really need to get a whole variety of sectors involved to address this.”

Charlie Nunn, Lloyds’ chief executive, stated that preventing fraud is more crucial than reimbursing victims. “There has been progress, some telecommunications specifically and some tech firms, others are behind,” he said.

“But it is not enough. If you look at the growth in fraud that we are seeing, we really need to work together and have more tools to work with those organisations to help us manage fraud.”

In other parts of the broad session, the lenders defended their savings rates after the committee pressured them to pass on higher interest rates to savers. The bosses explained that many customers were choosing to move money from current accounts into longer-term savings or separate pots with higher returns.

This has led to a significant change in customer behaviour and increased competition in the savings market, according to Lloyds. Mr Nunn also admitted that there has been “volatility” within mortgages, with rates rising again over the past six weeks. However, he mentioned that mortgage rates should continue to decrease over a long period.

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