Yahoo Finance Farage hails new debanking law as he prepares for legal battle with NatWest
Nigel Farage has backed a new law to protect victims of debanking as he gears up for a legal tussle with NatWest.
The Treasury has put forward fresh legislation that will force banks to give customers three months’ notice and a detailed explanation if they wish to close their accounts.
The proposal was introduced after Mr Farage said his accounts at NatWest subsidiary Coutts had been closed due to his political views.
The move prompted Chancellor Jeremy Hunt to rush through legislation that forces banks to improve the treatment of customers who were being debanked.
Mr Farage told The Telegraph: “This is a big step in the right direction, provided that the banks observe the intended spirit of the law and do not continue to use excessive money laundering rules as a cover for closure”.
Banks have been criticised for using a strict interpretation of rules designed to stop money laundering to close accounts.
The new debanking law could come into force as soon as this summer.
Under the new rules, banks will be forced to give customers a “detailed and specific” explanation about why their accounts have been closed.
The Treasury said the emails and letters to inform customers must also show a “high standard of transparency” about why their accounts were being shut.
“What matters is the outcome of the communication: that the customer clearly understands why the contract is terminated,” it said.
Banks will also need to give customers 90 days’ notice before closing their account, up from the current period of two months.
This is to give customers more time if they wish to complain to the Financial Ombudsman Service.
Although a review by the Financial Conduct Authority found most cases of debanking were because of fraud or sanction risks, the treatment of customers during the process has come under scrutiny.
The new rules come as Mr Farage readies for a legal tussle with NatWest over his account closure.
He has appointed Mayfair-based Grosvenor Law to handle his claim while NatWest recently hired City law firm Addleshaw Goddard to defend the case.
The debanking crisis at NatWest eventually sparked the exit of chief executive Dame Alison Rose, who had spoken about the case to a BBC journalist.
