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Coutts Bank’s Nigel Farage saga is a reminder that access to digital payments is a privilege

Should access to digital payments be a right, rather than a privilege?

This question has come into sharp focus in recent weeks in the UK after a high-profile dispute between former politician Nigel Farage - a controversial divisive figure in British politics after his high-profile campaigning for Brexit - and Coutts Bank, who had decided to close his bank account with them earlier this year.

It was reported that Coutts’ reason for the closure of Mr Farage’s account was commercial, with reports claiming his wealth threshold meant he was no longer eligible to hold an account at the prestigious bank - only for later disclosures to reveal that the decision was ideological, based on the bank disagreeing with his views.

The allegation that the then CEO of Coutts’ parent company NatWest was the source of the leaks, and the subsequent handling of the crisis, led to the resignation of the CEOs of both businesses.

The thing is, Coutts (or any other bank in the UK) are at liberty to close any person’s account, for whatever reason, at any time - though they should provide notice, and not close an account on the basis of “unfair bias or unlawful discrimination” as the regulator the Financial Ombudsman Service (FOS) puts it.

Having made his case in the court of public opinion at least, it would now appear that Farage may even have his account reinstated, but this has led to media reports about many other ‘ordinary’ people who have had accounts closed for no apparent reason and have been left without access to any bank account.

The issue is, it’s only if the person whose account has been closed can prove the closure was unfair or unreasonable can they make a case for compensation - an unfair David vs Goliath situation to put people in. Not everyone has the resources or profile of Mr Farage which is, he argues, a scandal and the main reason for his going so public.

There is an argument to say that banks, as private businesses, should be at liberty to decide who their customers are. Access to financial services is not a human right, and there is an argument to say that the start should only intervene in the event of market failure. In Mr Farage’s case, he is at liberty to bank elsewhere - but is this true for everyone?

And much like famous people who hold views that are inconsistent with a bank’s value, people on low incomes or those with low credit scores may not be attractive or profitable customers for banks - and to what extent should the state provide for them, given how difficult it is to live without access to banking services?

All of this comes at a time when the ability to pay in cash, and not have to rely on a bank, is starting to come under threat.  There is a separate debate to be had over whether access to a bank account should be a right, and it is right that the regulators consider this.

As a fintech company that gives businesses insights into how physical cash flows through the enterprise, providing the ‘missing link’ of retail data - we believe in the future of physical cash and that regulations should also include preserving and protecting its use in society.

Banks and payment companies may be private enterprises but should, like cash, be obliged to support universality.

Cash needs protection as a method of payment method; which requires universal access and universal acceptance, even as payments go increasingly digital. Many of the most vulnerable people in society require it and cash is an important backstop for when digital payments aren’t available, for whatever reason.



Comments: (2)

A Finextra member
A Finextra member 30 August, 2023, 09:20Be the first to give this comment the thumbs up 0 likes

The right to have bank account must be written into law. If a commercial bank refuses a citizen a bank account then an alternative banking capability must be available to them provided, perhaps as a community banking service.

Richard Page
Richard Page - Avizent - Reading 30 August, 2023, 11:33Be the first to give this comment the thumbs up 0 likes

When the Government moves to a 'programmable' CBDC (but hopefully citizens can stop it) then every citizen must have the right to a bank account. That could be a commercial bank, a state bank or a bank set up that is owned by citizens (like a cooperative bank).  But no-one should be excluded by law from having a bank account somewhere.

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