- Banks criticized for charity account closures.
- Regulators urge service improvement.
- Charities face financial hardships.
Large banks faced criticism from the three charity regulators of the United Kingdom for “suddenly closing or suspending” the bank accounts of charities.
High street banks are being urged by the Charity Commission for England and Wales, the Charity Commission for Northern Ireland, and the Office of the Scottish Charity Regulator to enhance their “substandard” services for charities.
It comes days after we disclosed that Barclays “debanked” a multitude of community bank accounts. Including those of charitable organisations, without prior notice or explanation.
Nigel Farage’s Coutts account closure battle with NatWest made debanking a hot topic. However, investigations unveiled the extent to which debanking is occurring within organisations. Such as a male voice choir, steam train enthusiasts group, and parish council.
Regulators’ Open Letter to Banks
The charity regulators stated in an open letter to the chief executive officers of major high street banks today that charitable accounts have been abruptly closed or suspended, and that the organisations have been subjected to “poor customer service and administrative delays.”
In one instance, the letter reported an abrupt suspension of a charity’s bank account. This happened after the charity requested scanned identification from over sixty trustees. The majority of whom were elderly and lacked internet banking access.
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Another charity’s account was blocked because a cancer-stricken trustee who was bedridden and unable to sign a document bearing the signatures of dozens of other trustees could not do so.
The regulators of charitable organisations stated that they had discovered that, in some instances, the disruption of operations rendered charities unable to pay employees.
The letter to the banks detailed additional obstacles faced by charities. These include inadequate customer service, the elimination of specialised banking services, and unsuitable online banking services.
Preserving Public Trust
The regulators cautioned that “inadequate banking provision may erode public confidence in charities.” Organizations could face reliance on risky practices if compelled. Such as trustees using their personal bank accounts or maintaining large unsecured cash reserves.
Helen Stephenson, chief executive officer of the Charity Commission for England and Wales, stated at the organization’s annual public meeting, “Charities are at the forefront of the current cost-of-living crisis, providing vital assistance to people across the nation during this difficult time.” Many are currently experiencing financial hardships.
Avoidable annoyances regarding the accessibility of bank accounts and the inadequate service provided by financial institutions compound donors’ existing burdens.
“Charities endure account closures or suspensions for extended periods of time due to inadequate customer service and administrative delays far too frequently.”
“This letter makes it abundantly clear that we hold the service provided to charities in question in contempt.”
“The scale of the banks’ response must improve immediately and swiftly.”
