Nikhi Rathi, the chief executive of the Financial Conduct Authority (FCA), has warned that banks will face severe consequences if they are found guilty of lying about cases of ‘debanking’, amid a series of high-profile cases in recent months.
Extreme action has been taken against a former chief executive of a large bank due to breaches of the integrity rules, following the fallout between Nigel Farage and Natwest earlier this year. If misinformation is intentionally given to customers, there will be serious consequences for the senior management involved, according to the FCA.
The primary reasons for account closures were due to inactivity or concerns related to financial crime. In that case, while four accounts at UK banks were closed for political reasons, a closer examination uncovered that three of these closures were attributed to inappropriate customer behaviour, specifically involving racist language, rather than being solely based on political opinions.
Nikhil Rathi cautioned the Treasury about “policy overload”, expressing concern over the government’s swift implementation of reforms in the financial services sector.
Wayne Johnson, CEO and co-founder, Encompass Corporation, commented: “As the attention and scrutiny around debanking continues, it remains critical that banks can ensure the fair and consistent treatment of customers – and are able to prove this – to avoid potentially significant consequences, as outlined by the regulator.
”This recent spotlight on debanking has highlighted the importance of implementing technology-driven processes, which allow banks to act based on verifiable facts, presented by live, authoritative publicly available data – and, crucially, evidence actions taken.
“Technology exists to establish a customer’s identity, providing real-time profiles, generated on demand, to validate and verify a company with full transparency. By leveraging this, banks can not only evidence compliance and protect their reputation with a robust, effective Know Your Customer (KYC) process, but also save time and maximise business efficiency across the board.”