Conservative MPs say hundreds of bank accounts belonging to defense companies have been unfairly closed, putting national security at risk.
advertisementBritish politicians are concerned about the impact of 'debanking' on the country's security and economic prosperity.
British lenders Santander and Lloyds closed 300 accounts belonging to “public administration and defense” companies last year alone, according to information given to the Treasury Select Committee.
In a letter published in Wednesday's Telegraph, Conservative MP Harriet Baldwin warned of the impact of “unbanking” on small businesses, pawnshops and defense companies.
Some financial institutions are withdrawing the service over concerns about the ethical implications of working with arms companies, senior executives said. Bank accounts may also be closed for mundane reasons such as inactivity.
“While there may be legitimate reasons for closing or rejecting a company's accounts, such as signs of money laundering or signs of long periods of inactivity, the confusingly vague term 'risk appetite' We found that thousands of accounts are still being closed under various justifications,” Baldwin said. her letter.
“It is wrong that banks in this country can systematically debank legitimate businesses and industries because their boards of directors are looking at what the banks do. If so, you should be able to access your bank account,” she continued.
Debate over “debanking'' has intensified in Britain since private lender Coutts closed former Brexit Party leader Nigel Farage's account last year.
Mr Farage obtained documents proving the closure was partly politically motivated. The bank's memo claimed that his right-wing views were “inconsistent” with the bank's “inclusive institutional position.”
Dame Alison Rose, CEO of Coutts owner NatWest, and Coutts CEO Peter Flavell have resigned as a result of the incident.
Since then, the UK's Financial Ombudsman Service has seen a surge in complaints about bank account closures believed to be unwarranted.
Figures released late last month showed there were around 3,900 complaints from individuals and businesses, an increase of 44% compared to the previous financial year.
In March, the UK Parliament proposed legislation to protect customers from 'bank debits'.
“The government is clear in its view that customers should not see their payment services suspended for reasons related to legal freedom of expression.”
If passed, the bill would require lenders to give customers three months' notice and explanation before closing their accounts.
This does not apply to customers who are denied service on anti-money laundering or anti-terrorist financing grounds.
Commenting on the closure of defense company accounts, Mr Baldwin argued that this trend was weakening the UK's defense capabilities by slowing down defense procurement.
This was a view supported by Tobias Ellwood, former chairman of the House of Commons Defense Select Committee.
“We cannot allow well-intentioned ESG standards to jeopardize our nation's defense capabilities in a dangerous world. Now is the time to fix this problem,” he said.
advertisementMs. Baldwin emphasized that “debanking” is also having a negative impact on economic growth by undermining the financial capacity of small and medium-sized enterprises.
A parliamentary inquiry in February found that Britain's eight largest banks closed 140,000 small business accounts last year, representing nearly 3% of the banks' overall small business customer base.
