- UK charity regulators hit out at high street banks for ‘debanking’ charities
- Charities could be driven to rely on ‘unsafe banking practices’ as a result
- Has your charity been debanked? Email [email protected]
The UK’s three charity regulators have criticised big banks for ‘suddenly closing or suspending’ charities’ bank accounts.
The Charity Commission for England and Wales, the Charity Commission for Northern Ireland and the Office of the Scottish Charity Regulator are urging high street banks to improve services for charities, which they have blasted as ‘substandard’.
It comes days after we revealed that a raft of community bank accounts, including those of charities, have been ‘debanked’ by Barclays without warning or explanation.
The UK’s charity regulators have criticised high street banks for suddenly closing and freezing the bank accounts of charities
In an open letter sent today to the chief executives of major high street banks, the charity regulators said that charities are having their accounts closed or suspended suddenly, and have been experiencing ‘poor customer service and administrative delays’.
In one case, the letter said a charity had its bank account frozen with little notice after asking for scanned identification from more than 60 trustees, many of whom were elderly with no access to internet banking.
Another charity had its account frozen after a bed bound trustee suffering with cancer was unable to sign a document, despite having the signatures of dozens of other trustees.
The charity regulators said they had found that charities were experiencing disruption to their operations and in some cases left unable to pay staff.
The letter to the banks outlined other challenges charities face, including the reduction of bespoke banking services, poor customer service, and unsuitable online banking services.
The regulators warned that ‘inadequate banking provision drives charities to rely on unsafe practices, such as trustees using their own bank accounts, or keeping large cash reserves unsecured – and public trust in charities may become eroded.’
Now, the regulators are calling on the banks to:
- Improve the process of setting up a charity bank account, to make it more straightforward for trustees.
- Improve staff training at banks on how charities are run, so that so they request correct documentation from trustees and prevent avoidable delay and unnecessary account freezes.
At the Charity Commission for England and Wales’s annual public meeting, CEO Helen Stephenson said: ‘Charities are on the frontline of the current cost-of-living crisis, providing vital support to people across the country at this challenging time. Many are themselves facing financial difficulties.
‘The current stresses for charity trustees are heightened by avoidable frustrations at the availability of bank accounts and substandard service from banks.
‘Too often, charities experience accounts being closed or suspended suddenly for long periods of time with poor customer service and administrative delays.
‘This letter makes clear that we consider the service charities experience is unacceptable.
‘The scale of the response from banks needs to improve, now, and at pace.’