What is “debanking” and how could you be affected?

Posted on

Nigel Farage made headlines recently after a public dispute with high net worth banking and investment establishment, Coutts, when they closed his account.

Their official reason was that he had fallen below the £1 million minimum investment and borrowing threshold after paying off a mortgage. Farage, on the other hand, claimed it was for political reasons.

While Coutts initially denied this, the former UKIP leader released a document containing evidence that they had discussed the “reputational concern” that he posed because of his political views when deciding to close his account.

The revelation led to a crisis for NatWest, the owner of Coutts. The bank’s chief executive eventually resigned, and Farage received an official apology from both the bank and the BBC for their initial reports about the account closure.

However, the matter is far from settled as Farage is now seeking compensation from Coutts, even though they offered to reinstate his account.

The incident also had wider implications as it brought the issue of “debanking” to the attention of the public and the government.

The Financial Conduct Authority (FCA) have been asked to investigate “debanking”

Since the dispute between Nigel Farage and Coutts Bank came to light, chancellor Jeremy Hunt has ordered an investigation into “debanking” – the closure of a bank account because of a perceived financial, legal, regulatory or reputational risk.

The chancellor tasked the Financial Conduct Authority (FCA) with investigating how widespread debanking is, and the specific reasons banks give for closing accounts.

The FCA must also provide information about the action they have taken to protect consumers against debanking.

The chancellor took a clear stance against the practice, reiterating that the FCA has the power to fine banks if they are found to be acting unjustly.

The government has also discussed putting new laws in place to reduce the power that banks have to close accounts.

That said, it may take some time before they implement any changes, and the current laws surrounding bank account closures are not especially robust.

As such, debanking may be more likely to affect you than you think.

UK banks are closing more than 1,000 accounts every day

The issue of debanking is currently in the news because of cases involving high-profile political figures. Consequently, you may not think it is likely to affect you but that is not necessarily true.

There are many reasons why a bank could close your account, regardless of whether you are a public figure or not. These include:

  • Not using the account very often
  • Suspicious activity on the account
  • Sending large sums of money overseas
  • Providing incorrect information when opening an account.

As such, anybody may be at risk of having their bank account closed and it is more common than people realise.

Indeed, as reported by the Guardian, UK banks are closing more than 1,000 accounts every day. The data also shows that the practice is becoming more common.

In 2016/2017, for example, banks closed around 45,000 accounts. This figure rose to more than 343,000 in 2021/2022, so debanking is a growing concern.

While some of those affected are “politically exposed persons”, many people who are not in the public eye have also had their accounts closed. In some cases, the banks provided little to no explanation to consumers about why.

As such, it is important to understand what your rights are if your bank unexpectedly closes your account.

What does the law say about debanking?

The laws about debanking are not especially clear and, while there are some protections in place, the bank may still reserve the right to close your account.

Under the Basic Bank Account agreement put in place in 2016, the nine largest high street banks agreed to provide a free basic bank account to anybody who does not already have one with another institution.

However, this only applies to a simple current account and the agreement is designed to ensure that everybody has access to basic banking services. Consequently, it does not apply to other types of bank account and will likely not protect you against debanking.

In fact, there are no specific laws in place to stop banks from closing your account if they want to.

Technically, they can close your account for whatever reason they decide. However, they must adhere to the same guidelines that other businesses do about “treating customers fairly”. This means they should not:

  • Discriminate based on race, gender or sexual orientation
  • Break their own guidelines and procedures
  • Close an account without giving adequate notice – Banks should provide two months’ notice in normal circumstances, but they are not legally obliged to
  • Give conflicting information to customers.

Unfortunately, the situation is not always clear, and it may not be immediately obvious if the bank is breaking these guidelines.

Additionally, you may need to prove that the bank has treated you unfairly and this can be a challenge, especially where issues like discrimination are concerned.

Ultimately, this could mean that you have no legal protection against debanking. That said, there are certain steps you may want to follow if your account is closed.

What happens if you are debanked?

If your bank closes your account, your first concern will likely be what happens to any remaining funds. Fortunately, the law states they must return any money to you, unless you have committed a crime.

The bank usually pays the funds to you in the form of a cheque, minus any outstanding fees or payments. However, you may be unhappy with this outcome if you feel you have been treated unfairly and still want to use the account.

If you want to contest the decision for any reason, contact the bank directly and discuss it with them first as they may be able to resolve the issue. If they are closing an inactive account, for example, they may agree to open it again if you use it more often.

Otherwise, you can file an official complaint with them and request that they take action to reinstate the account. The Financial Ombudsman Service may be able to help if the bank does not resolve the issue at this stage.

To escalate it further, you will need a final response letter from the bank, and you must make a complaint to the ombudsman within six months of the account closure.

At this stage, you may need to provide evidence that you were treated unfairly, and the ombudsman will approach the bank for an explanation about the closure.

They will then make a judgment and order the bank to act. This could be in the form of compensation or, if they deem it necessary, they have the power to make the bank reopen your account.

Get in touch

If you have funds in a high street account and you’re seeking a way of improving the potential for growth, get in touch to discuss how we can help you to protect your wealth.

Email enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.


We aim to keep our clients up to date on interesting and relevant financial news.

You can sign-up to receive our monthly newsletter by email, even if you’re not yet a client. Sign-up using the form below.

Client testimonials

I have always found Black Swan to be caring and understanding of my quirky lifestyle. I always feel they try to get me the best returns while respecting my current needs.

Sally Muir

A client since 2011

We would be very happy to recommend the support and service we receive.

Valerie Locks

A client since 2010

I have always been completely useless regarding finance - thankfully our financial adviser is not! I've retired with far more than I ever expected and investments continue to grow safely. So - thank you!

Bernadette Jane Warner

A client since 2000

Very happy with the professional service I have received and feel a lot happier now with my finances put in order.

Martin Field

A client since 2011

Julie Cooper was recommended to me by a work colleague. She has been very helpful, professional and has explained everything well. I would definitely recommend her services to anyone else who are interested in a financial review.

Steven Rooke

A client since 2018

…Service has been first class.

Hugh Fells

A client since 2012

My face to face meetings with Rob Young and Jessica Lyons have always been very open and understandable. My questions have been answered clearly and I have left feeling that my financial matters are in good hands.

Sandra Jack

A client since 2000

[A] safe pair of hands in a complex financial world.

Gary Middlehurst

A client since 2003

A reliable company with good communication skills and good knowledge of the financial markets.

Alan Evetts

A client since 2014

Maureen Pembridge is a long-time trusted advisor to our family. The market might fluctuate but her attention to detail is consistent.

Linda Burnard

A client since 2000

I am pleased to recommend Julie as a trustworthy financial advisor. She explains financial jargon in plain language, and always listens carefully to my particular financial needs and has helped me make the best of my savings.

Carolann Samuels

A client since 2010

I have always been satisfied with the way that Black Swan has handled my account. And I have always found the staff very helpful whenever I need to call the office.

Robert Anthony Matthews

A client since 2012

An excellent personal service from a person I know and trust.

Michael Dalton

A client since 2010

I am getting a very good services from Black Swan, they have got my investments sorted out which was in a bit of a mess.

Roy Jakens

A client since 2012

A good, efficient team providing clear ideas to shape a winning strategy.

Adrian Michael Levenstein

A client since 2011

Black Swan is a company to be trusted, with friendly staff and professional advisors.

David Brian Jennings

A client since 2017

I have been with Black Swan for many years. I have never wished to change anything. They give a good straight forward service.

Martin Barrett Brooks

A client since 2010

Andy Peters has been invaluable in firstly combining several pension pots and then giving excellent investment advice. It has given us a great deal of comfort to know that our financial affairs are in such good hands.

James Guillum Scott

A client since 2014

I find my financial advisor easy to talk to and feel that she understands my lifestyle. She is always available for help when I need her and explains in words that I can understand.

Margaret Ena Glasgow

A client since 2000

Andy is a first rate Director, excellent communicator and leader.

Ross Perry

A client since

Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

Alan & Jane Dyer

Clients since 2012

We have always found Rob [Young] to be very approachable and knowledgeable. We have every confidence in the advice given and feel comfortable with the decisions we’ve made. There are certain opportunities that we wouldn’t have known about if Rob hadn’t brought them to light, which makes the advice good value for money as far as we’re concerned.

Peter & Pauline O’Halloran

Clients since 2013

Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

Sarah Wilson

A client since 2015

I am extremely happy with the service afforded to me by the company and my adviser Julie Cooper.

Geoff Coxell

A client since 2010

My wife and myself have been dealing with Black Swan for a number of years. We have met with different representatives from the company over the years and have found all very helpful in their own way. We met with James [Anderson] a few years ago and found him very helpful and knowledgeable. He keeps in contact with us on a regular basis. We find the Company information very helpful and we feel very secure with our finances.

Andrew Kirchen

A client since 2015

I have always found my adviser to be easy to contact, very professional in his approach, yet friendly and understanding. I have a sense of an experienced company behind him, really on the ball financially and with good standards.

B McBean

A client since 2011

Partner with the most reliable and experienced team of advisers

Enter your details & we'll be in touch to discuss your needs.
Alternatively, contact us directly and speak to a member of the team.

    Subscribe to our newsletter