Banks: Internet Transfers of Cash

Lord Mackenzie of Framwellgate Excerpts

Thursday 9th July 2020 Lords Chamber

Asked by

[Lord Mackenzie of Framwellgate]

To ask Her Majesty’s Government what assessment they have made of the impact on the cashflow of small and medium-sized companies of banks quarantining internet transfers of cash on the grounds of security.

[Baroness Penn (Con)]

My Lords, the UK is recognised as having a world-leading system for combating economic crime, creating a secure and transparent business environment. In response to the disruption caused by Covid-19, the Government have taken unprecedented steps to support business cash flow, including the Coronavirus Business Interruption Loan Scheme and the bounce-back loan scheme. These are helping to support small businesses suffering temporary cash-flow issues by providing the finance they need to get through this challenging period.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, we all support security checks by banks to prevent fraud and scams. However, there seems to be evidence emerging that some banks are routinely delaying transfers by holding up payments in the name of security. It is apparent that transfers are being frozen by banks without any adequate reason being given. Complaining is then made difficult by inadequate staffing or working from home, with long queueing on the phone. False promises of jam tomorrow are made. In some cases, the delay is blamed on HMRC, which blocks the payment with some kind of flagging mechanism on the account. Even when cleared, removing the flag is woefully slow—over two or three weeks, in one example, allegedly because HMRC is inundated with work. This is not good enough. The Minister knows that cash flow is the lifeblood of business, and these blockages in companies’ financial arteries are haemorrhaging British jobs. I ask the Minister: should there not be a duty on the banks to notify card-holders immediately when transfers are delayed and put on hold like this? Could the Minister advise the House on whether the banks profit by returning possession of these funds, which must amount to significant sums at any one time?

[The Lord Speaker (Lord Fowler)]

I repeat my instruction to have short questions. It is totally unfair on other questioners.