Lenders face Treasury probe after closing several accounts with help of indexes

Ben Keith features in The Daily Mail, published 7 July 2023. Click here to view the article on The Daily Mail Website. 

Banks are shutting down the accounts of high-profile individuals without explanation using flawed online databases, experts have warned.

High street lenders are facing a Treasury probe after closing numerous accounts with the help of vast online indexes that scrutinise 'politically exposed persons' (PEPs).

Leading Brexiteers Nigel Farage and Claire Fox have both complained they have been politically targeted by partisan institutions, while other individuals have also accused banks of refusing customers because of their political beliefs.

Ministers are now considering scrapping EU laws which demand 'enhanced' checks on people in public life.

Ben Keith, a lawyer who has represented various individuals who have seen their accounts closed with little explanation, said:

'The main flaws of the system are the overreliance on the third party agencies and a lack of any proper mechanism to challenge de-banking.'

'This starts from the point of the closing of the bank account when the bank is not required to give any reasons.'

'It is possible that under ESG [environmental, social, and governance] or equality and diversity policies or just reputation management that a bank makes a commercial or reputational decision. But again, since no reasons are given, it is very hard to tell.'

He said:

people who simply present a high reputational risk - for example, if they are criticised in media stories - are more susceptible to having their accounts scrutinised by banks.

Mr Keith said another issue is that the third-party databases treat less prestigious publications which carry such criticism with the same validity as traditional media.

These databases monitor British customers and detail those who could be under sanctions or are considered vulnerable to bribery. The final decision to close an account is made by a human.

Earlier this week the Treasury launched a probe into whether banks are striking the right balance between commercial risk and allowing their clients freedom of expression.

High street lenders are facing a Treasury probe after closing numerous accounts with the help of vast online indexes that scrutinise 'politically exposed persons' (PEPs) (stock image of London's financial heart, the Bank of England)

Officials have urged regulatory bodies like the Financial Conduct Authority to 'prioritise' the matter over the coming months.

Both Chancellor Jeremy Hunt and Business Secretary Kemi Badenoch are now thought to favour amending EU regulations on account scrutiny which have been passed into UK law.

Tory peer Lord Moylan said: 'Now we've left the EU we could revert to the proper international standards by introducing a distinction between domestic and foreign PEPs.'

Ben Keith is a leading barrister specialising in cross-border and international cases. He deals with all aspects of Extradition, Human Rights, Mutual Legal Assistance, Interpol, Financial crime and International Law including sanctions. He represents governments, political and military leaders, High Net Worth individuals, human rights defenders and business leaders in the most sensitive cases.

He has extensive experience of appellate proceedings before the Administrative and Divisional Courts, Civil and Criminal Divisions of the Court of Appeal as well as applications and appeals to the European Court of Human Rights (ECHR) and United Nations. Ben is recognised in Chambers and Partners and The Legal 500.