Recommendation 43

HM Government Not Addressed

Whilst access to banking services is an important consideration for the FCA, firms have commercial freedom, subject to some restrictions, to choose who they do business with. They are responsible for setting their own business models and for setting their risk appetite on the types of customers they wish to deal with. A bank’s decision on whether or not to provide its services to a prospective customer, or to maintain a relationship with an existing customer, can be influenced by a number of factors, including the firm’s assessment of the risks associated with that relationship and the costs of providing services to certain customers. Whilst we cannot require a bank to provide services to a particular customer, we expect banks to observe their obligation to pay due regard to the interests of customers. We collect relevant information from firms on the operation of their financial crime systems and controls, and keep this under review. As part of this work we collect, and have regularly published, information on the number of accounts that are exited for financial crime reasons. Whilst we do not routinely collect data on firms freezing accounts, we expect firms to investigate any accounts they freeze in a timely manner and to unfreeze them promptly when appropriate. We recognise that a number of stakeholders are concerned that such controls may be unfairly deployed by some firms. We do regularly publish findings from our supervisory work in relation to AML compliance, these focus on supervisory outcomes rather than on the underlying number of accounts exited or frozen. We intend to continue to adopt this approach in line with our focus on outcomes. We do not consider that the data currently available to us can provide a direct insight into the scale of the potential problem of de-risking and freezing of accounts. There are considerable challenges in obtaining comparable data on all forms of account exit and freezing across the retail banking and e-money and payments sectors. This is due to the variety of business models, and different forms that account exit and account or transaction freezing can take. Rather, we are focusing our data collection on accounts exited for financial crime purposes. We are following up with individual firms on their broader financial crime controls and approach to account exiting and freezing. In our view this is a more effective and outcome-focused use of our supervisory resources than further broadening our collection and publication of data on account freezing and de- risking. Account freezing and exit is an important and legitimate response to suspicions of money laundering and other economic crime. We take this very seriously and are actively monitoring available intelligence and targeting supervisory resources to identify and address potential cases of unfair account freezing or de-risking. We regularly review the trend in the number of consumers getting in touch with our Contact Centre with concerns about their accounts being frozen or closed. Under Regulation 105 of the Payment Services Regulations, as set out in our Handbook, we require banks to inform us if they refuse a payment services provider access to payment account services and to set out the reasons for the refusal. We have followed up with firms on these returns and, to date, we have found that where banks have exited relationships with payment services providers, they have generally been able to find alternative banking arrangements within a reasonable timeframe.