In July 2023, Rishi Sunak made a surprising public attack on the leaders of a major UK bank. “Rishi Sunak slams Coutts”. It is perhaps not surprising, however, that he picked the wrong issue. What prompted his unusual intervention was the denial of one sort of bank account to one rich man. Sunak ought to be far angrier about the denial of any banking services at all to thousands of poor people, charities and small businesses.
The loss of local banking is well-documented. In the same month that Sunak got so excited about one man being denied use of one account, it was reported that banks and building societies have closed, or have scheduled to close, a total of 5,695 branches. In 2023 alone, HSBC plans to close 114 branches, Lloyds 107, NatWest 140 and Barclays 156.
A recent Parliamentary Briefing paper reported that around 10 per cent of the rural population now live at least 10 miles away from their nearest branch. It notes that “This creates significant challenges for the disabled and elderly who are less able to move to online banking.” It also creates problems for small businesses who lose access to a secure place to deposit cash.
It speaks volumes that Sunak gets angry when Nigel Farage can’t have a posh person’s account with NatWest but says hardly a word about all those people who can’t get banking services at all.
Personal experience has recently brought home to me another way in which our banking system is routinely failing our country.
I chair a small charity that has banked with Santander. Over a year ago we applied to change from an unincorporated association to a charitable incorporated organisation (CIO) It is a form of organisation preferred by the Charity Commission and many funding bodies, and was duly approved. The aims and objectives of the new organisation are virtually identical to those of its predecessor, but we acquired a new charity number, and this required us to set up a new bank account.
In the first week of January 2023, Santander confirmed they could open a new account for us. The process was simple, they said, and would take at most a few weeks. As I write (September 2023) we are still dealing with it.
To begin with, the bank insisted that unless every trustee banked with Santander, all eight would have to travel to Cirencester at the same time to open the account. It would be hell to schedule, and a round trip of around 160 miles for everybody. Two hours by car each way in light traffic. A nightmare by public transport.
Three trustees, not wishing to be blackmailed into opening an account they didn’t want, promptly resigned. Since the remainder held the requisite personal account, we were promised we could apply using modern technology.
We spent until July struggling with the bank’s unreliable and often incomprehensible electronic systems, uploading document after document. Then, just as all seemed to have been completed, Santander told us it could not open a new account with the same name as another one. They had been aware of both names since day one.
To resolve the matter, we closed the old account, moving the money to a trusted intermediary. We then completed the last steps in the process. All the officers of the charity had to meet together to sit around the same telephone while a member of bank staff read out the sort of tedious small print that is attached to every contract.
What sort of an organisation is it that can’t even arrange a Zoom call?
The account opened and we transferred our funds back. Then, after a week, Santander raised more questions, asking for changes to our constitution that are impossible and possibly illegal and threatening to suspend the account.
By now, readers may be asking why we have persisted in dealing with an organisation that is so unwelcoming. The answer is that we have little choice. To collect and disburse money, and to account properly for how it is spent, requires a range of modern banking services. Yet all major banks make it difficult to open accounts for small organisations. Our treasurer reports much the same experience in dealing with Lloyds concerning a community centre. Julian Lomas of Almond Tree Consulting, who advises charities on constitutional matters, told me that of over 40 clients he advised this year, only a small handful escaped similar problems with banks.
These are the same banks whose recklessness caused the financial crash of 2008. They are the same banks that have been bailed out at vast public expense. They are hugely profitable but seem to regard the provision of basic banking services for UK citizens as an unpleasant distraction from financial speculation.
The hostile environment created by banks for the poor, the remote, for charities and small businesses would have been a worthy target for Rishi Sunak’s anger. A prime minister who cared for his country would have castigated these companies for abandoning any sense of social obligation. Sunak didn’t, but then again, he had been a banker.
