Bank Accounts

Baroness Penn Excerpts

Wednesday 19th July 2023 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I beg leave to ask a Question of which I have given private notice. In asking this Question, I declare that I have a bank account with NatWest.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, the Government unequivocally support the right to lawful free speech and consider it unacceptable for banks or other payment service providers to terminate contracts on these grounds. Earlier this year, the Government launched a call for evidence which included questions on the issue of payment account terminations and freedom of expression. We will soon set out plans for enhanced requirements applying to the termination of payment accounts.

[Lord Lamont of Lerwick (Con)]

My Lords, I am grateful to my noble friend for confirming that it is the Government’s view that no bank account should be closed for political reasons. Does she therefore agree that it is not for a bank to judge whether someone’s personal or political views accord with the so-called “values” of the bank and that that is not a reason for closing an account? Equally, does she agree that it is not for a bank to judge whether someone’s views are out of tone with wider society and then use that as the pretext for closing an account? Is this not a fundamental issue which ought to concern everyone of every party—left, right, centre or flat earth—who might all be the next person to suffer under what is happening? Will my noble friend ensure that the number of cases that have been reported recently, which, prima facie, seem to indicate that accounts may have been closed for political reasons, are referred to the regulator and investigated? Will she confirm that this a fundamental right of free speech in a free society?

[Baroness Penn (Con)]

I absolutely agree with my noble friend and reiterate once again that the Government unequivocally support the right to lawful free speech and consider it completely unacceptable for banks or other payment service providers to terminate contracts on these grounds. We issued a call for evidence that covered these issues and will consider all evidence as part of that. As my noble friend noted, I am sure that the regulator will also want to consider these matters.

[Lord Hunt of Kings Heath (Lab)]

My Lords, does the noble Baroness agree that part of the problem is that her department and the FCA were very slow to take action against the banks for the unwarranted interference in parliamentarians’ lives because they failed to operate the guidelines on PEPs appropriately and proportionately? Can we expect to see the FCA take disciplinary action against the banks that are doing this?

[Baroness Penn (Con)]

My Lords, it is important to distinguish between any action that may have been taken on freedom of speech grounds, or on the grounds of people’s political views, and the PEP regulations, which are to do with people’s status as politically exposed persons. However, the noble Lord is right, and we have discussed this issue in the House many times: the banks have not always applied those regulations and guidance as they should. That is why we had two amendments to the Financial Services and Markets Act to take action in this area, both to amend the regulations and for the FCA to review its guidance and the banks’ adherence to it. My right honourable friend the Economic Secretary has written to the FCA again recently to reiterate the importance of that review and to say that, if any action can be taken during the conduct of that review, we will expect that to happen also.

[Lord Forsyth of Drumlean (Con)]

My Lords, I declare an interest as the chairman of a bank. I also have an account with Coutts Bank—although, by the way, I have nothing like the wealth that has been mentioned. I point out to my noble friend that Coutts Bank is owned by NatWest, and the largest shareholder in NatWest by a long way is the Government. Should the Government, as a shareholder, not say to NatWest that this kind of conduct is unacceptable? Also, what is the FCA doing? On the basis of what we read in the newspapers, Coutts Bank has been in breach of rule 4, which requires it to treat customers fairly.

[Baroness Penn (Con)]

My Lords, as my noble friend has noted, the Government have a shareholding in NatWest Group, but it is managed at arm’s length and on a commercial basis by UK Government Investments and I do think that is the right approach. My noble friend also noted the role of the FCA. He is right that it is for the FCA and other relevant independent bodies to determine whether any breach of regulatory requirements has taken place—so I will not comment on that, but I would expect them to do so.

[Baroness Kramer (LD)]

My Lords, I gently suggest to the Minister that the issue of PEPs and the issue of people expressing their political views and then being treated badly are in fact entangled one with the other. I am just outraged that Nigel Farage was denied a bank account, but I was also denied a bank account at Chase UK this year because I could not produce physical payslips for my husband, who died 17 years ago. That had to be a specious reason, and I suspect that the real reason is that I am a Liberal Democrat who speaks out on issues in a way that the bank does not particularly like.

So I will just say that the PEP regime has got completely out of hand. It has been outsourced to consultants who make their money from dire and irrational interpretations. Will the Government please press the FCA not just to renew sensible guidance but to make sure that it is followed? Could she please tell it to focus its energies on the real abusers and the real money launderers?

[Baroness Penn (Con)]

Well, I can reassure the noble Baroness that that is exactly what the amendment to the Financial Services and Markets Act requires the FCA to do. It should look not just at the appropriateness of the guidance but at firms’ adherence to that guidance. We have asked it to get feedback from those who are affected by this guidance and take particular account of the impact on family members, which is an issue that many noble Lords have raised with me. We expect the FCA to follow that rigorously. The FCA is required to provide an update to this House on the progress of that work within a few months of it starting, and I am sure noble Lords will pay close attention to that.

[Baroness Deech (CB)]

My Lords, I know it is customary for children to blame their parents for everything, but will the Minister extend her concern to credit cards? My daughter, who is a very modest earner and has had the same credit card provider for 20 years, is being investigated in depth, with every piece of financial information needing to be produced, and we can think of no reason other than that I am her mother.

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[Baroness Penn (Con)]

The changes to the regulations that the Government are committed to and the review by the FCA do not just cover banks; they cover the provision of credit cards and all other services that are covered by the anti-money laundering regulations relating to politically exposed persons.

[Earl Attlee (Con)]

My Lords, on at least two occasions Lords Ministers have indicated that the complete integrity of the money-laundering regulations is more important than facilitating the export of armoured fighting vehicles to Ukraine, even under export licence. In the light of what has happened recently, will the Minister agree either that this matter will be reviewed or to have a further meeting with me?

[Baroness Penn (Con)]

My Lords, I am not sure that events recently pertain to the particular case raised by the noble Lord. I was pleased to meet with him and as I committed to then and commit to on an ongoing basis, we will continue to engage with the Ministry of Defence to ensure that we have an understanding of the issue and that people do not face a wider systemic barrier.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I declare my interest as chairman of C Hoare & Co. Does the Minister agree that customer confidentiality should lie at the heart of banking, and that a bank apparently commenting on the income and wealth of a customer is completely unacceptable?

[Baroness Penn (Con)]

I agree with the noble Lord on both points. When it comes to assessing whether that has taken place, that is a question for the regulator.

[Lord Davies of Brixton (Lab)]

My Lords, I have to express a bit of concern about what I take to be the mood of the House. Will the Minister confirm that a PEP regime is essential, albeit one that is properly operated, and secondly, that if people cannot account properly for their income, it is right and proper for banks to refuse to continue an account?

[Baroness Penn (Con)]

My Lords, that is why it is important to distinguish between the PEP regime, which has caused problems for people, and questions about banks’ actions in relation to freedom of speech or political views. It is important, though, in both circumstances, whether you are a PEP or you have expressed any view that is lawfully held, that you have access to bank accounts. In taking forward our work on PEPs in particular, we are mindful of always maintaining our commitment to international standards in this area, and our amendments to the Financial Services and Markets Act do just that.

[Lord Swire (Con)]

Has my noble friend had any discussions with her colleagues in the Foreign, Commonwealth and Development Office about the fact that some overseas missions find it impossible to open bank accounts in the UK? This happens the entire time, and it seems rather invidious to ask these people to come here to open embassies and then say they cannot bank when they are here.

--- Later in debate ---

[Baroness Penn (Con)]

FCDO colleagues have not raised this with me but if there is an issue, I will be more than happy to sit down with other departments and discuss what we can do about it.

[Lord Livermore (Lab)]

My Lords, access to financial services should of course never be determined by a person’s political views, but just as those with assets of £1 million should not unduly be denied a bank account with Coutts & Co., so those with substantially less should not be denied access to basic banking services. Yet the Financial Conduct Authority estimates that more than 1 million people in the UK have no bank account and one in four people will experience financial exclusion at least once in their lives. The Government recently overturned Labour’s amendment to the Financial Services and Markets Act to require the FCA to have regard to financial inclusion. Do the Government now regret that decision?

[Baroness Penn (Con)]

My Lords, I absolutely agree about the importance of financial inclusion, and we have seen significant progress on that issue in recent years, including through establishing provision of basic bank accounts. That means that anyone in society, whatever their means, has the right to access banking, and we will continue to promote access through our work on financial inclusion.

[Lord Cormack (Con)]

My Lords, in answer to my noble friend Lord Forsyth, my noble friend the Minister said that the Government had their shareholding handled at arm’s length, or words to that effect. I completely accept that, but the moral fact is that the Government are the largest shareholder, so should they not take a particular interest in this political issue?

[Baroness Penn (Con)]

My Lords, the Government have taken an interest in this issue, which is why we issued a call for evidence earlier this year that covered freedom of speech and bank account closure. That is the right avenue through which the Government should seek to address this issue, rather than through their shareholding in a particular bank.

[Lord Blunkett (Lab)]

My Lords, I am fully in favour of the Government protecting the rights of the “Coutts one”, as they should be protecting the rights of the 1 million who cannot get a bank account. But is it not perverse, on the day that the Prime Minister has rightly apologised for the egregious treatment of LGBT people in the Armed Forces, for the Home Secretary to widen this debate into a full-frontal attack on equality, diversity and inclusion? Is that not totally unacceptable as well?

[Baroness Penn (Con)]

My Lords, I think the point we can all agree on is that the right to lawful freedom of speech is fundamental. Where that has been seen to be brought into question through the provision of services, we have cause to worry.

[Lord Fox (LD)]

The Minister rightly upheld the need for access. One of the ways people access banks is through bricks and mortar branches in our towns and cities. These continue to be closed; every week banks are closing. What conversations has her department had with banks about their closures and what was the content of those discussions?

[Baroness Penn (Con)]

This is an issue we have discussed, including during the passage of the Financial Services and Markets Act. The Government legislated in that Act to protect access to cash for consumers and business depositors, which will help people continue to access banking. Banking hubs are also being rolled out in areas that may be seeing closures, and those signed up to banking hubs have given a commitment that, where a hub is due to be opened in an area, the last bank will not shut until it is open.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, as the Minister will remember, I tabled an amendment to the financial services Bill on this very question—as distinct from PEPs—of political values closing down accounts, and I was told that evidence was being sought. Is the Minister concerned that the only reason we now know this is happening is not because of anything the Government have done, but because a high-profile figure is pursuing the issue and getting a lot of attention? Secondly, can the Minister comment more broadly on the danger of the corporate power of financial services being used to bully customers into accepting certain values of equality, diversity and inclusion that have nothing to do with equality or diversity in any real sense, but with imposing their views on customers, for fear they will get their accounts cut off?

[Baroness Penn (Con)]

I reassure the noble Baroness that the Government’s commitment to issuing a call for evidence included issues of payment account terminations and freedom of expression. I believe the call for evidence closed before the issue that prompted this Question came to light. The Government are delivering on their commitment.

I close by stating once again that the Government unequivocally support the right to lawful free speech and consider it unacceptable for banks or other payment service providers to terminate contracts on these grounds.