UK banks closing over 1,000 accounts daily including those of MPs. Here’s why

UK banks are closing more than 1,000 accounts every day, Guardian reported citing new data which fuelled a row over so-called “debanking”.

Ukip leader Nigel Farage called for a royal commission to investigate the “scandal” saying that he was starting a website to campaign on behalf of people whose accounts had been shut.

Data obtained through a freedom of information (FoI) request made to the Financial Conduct Authority (FCA) showed that in 2016-17 just over 45,000 accounts were shut by banks. This number has increased every year since climbing to just over 343,000 accounts in 2021-22– more than 1,000 every business day of the week. The account holders did not receive any information over the shutting.

These also included Nigel Farage’s own bank account who said that he would be happy to have a royal commission set up to examine the problem, “provided it happened quickly”.

“I’ve just been inundated by small businesses, by folk all round the country. People in absolute fear, terror, lives being ruined, thousands of businesses being closed. These are people who have done nothing wrong whatsoever,” he said.

Some UK politicians have also been turned down by banks as it was estimated that almost 90,000 individuals have been categorised as “politically exposed persons”. These include some UK MPs as well.

UK energy secretary Grant Shapps revealed that he and his family had been victims of debanking because he is a politically exposed person. One bank had demanded 18 years’ worth of payslips before it would let him be a customer, he said.

The FCA said that increased monitoring by banks might explain some of the increase in account closures. “We know that the total number of customers that banks have ceased doing business with for financial crime reasons is less than 0.2%. Tackling financial crime remains a priority of the FCA. We have seen firms increase their monitoring of accounts over the past couple of years, which may account for the increase in the figures,” it said.

The UK government also announced plans to change the rules around bank account closures including a requirement for banks to give longer notice.