Yahoo Finance MPs probe NatWest for locking customers out of accounts 'for no good reason'
MPs have launched a probe into NatWest bank for purportedly freezing the accounts of vulnerable customers “without good reason”.
Mel Stride MP, the chair of the Treasury Select Committee, which scrutinises financial bodies, has written to the head of the City watchdog Nikhil Rathi to ask what the Financial Conduct Authority, the City watchdog, was doing about “concerning” reports NatWest had “frozen the bank accounts of vulnerable customers on low incomes for no apparent reason”.
The Conservative MP asked the FCA how it was ensuring all banks were treating customers fairly and asked it to look into how widespread the issue had become across the banking sector.
He said the committee was investigating to what extent banks’ artificially-intelligent security measures were contributing to the accounts of innocent customers being shut down.
It follows a number of reports about taxpayer-owned bank NatWest, formerly RBS, freezing the accounts of thousands of customers without warning or explanation. Banks retain the right to shut down accounts under rules designed to fight against money laundering, known as “de-risking”.
But victims of the rules who have been unable to pay bills after being locked out of their cash have protested their innocence and criticised NatWest and other banks, accusing them of treating them like criminals.
Strict financial crime regulations and the risk of tipping off lawbreakers means banks are often unable to explain why they close down an account, which has added to the frustrations of those affected.
This newspaper reported on the issue in 2019 and again in November of last year. The problem affects all banks, but NatWest customers have been especially vocal on social media. A Facebook campaign group for victims now has almost 6,000 members.
Charities, which process large numbers of transactions from various sources, in particular have suffered. Some 79pc of charities said they had their accounts closed down under de-risking measures in a 2016 poll carried out by Charity Finance Group, a charity.
Security experts said the problem had worsened as safety protocols at financial institutions have advanced, with computer systems in some cases becoming overzealous.
The banking trade body UK Finance said banks had to adhere to strict rules which prevented them from communicating with customers until they could be satisfied there was no risk of criminal activity.
A NatWest spokesman said the bank had “clear legal and regulatory responsibilities” to protect customers and accounts from crime.
“We take these responsibilities very seriously and will only take action if we detect any suspicious activity. A decision to close a customer’s account is only reached after very careful consideration. These decisions are never taken lightly and they are in no way related to socioeconomic factors,” the spokesman said.
In March the FCA launched criminal proceedings against NatWest for allegedly failing to adequately monitor and scrutinise almost £400m of suspected dirty money that had flowed through its accounts from 2011 to 2016.
