Complaints about debanking have soared by 44% as businesses grapple with a spike in account closures, according to the latest figures.
The Financial Ombudsman has been inundated with 3,858 complaints related to debanking in the 2023/24 financial year, data from Parliament's Treasury Committee reveals. This marks a significant 44% increase from the previous year and a 69% rise over three years.
Dame Harriett Baldwin, who chairs the committee, expressed concern that some "legally operating businesses are being unfairly debanked". The issue gained traction after Nigel Farage, the former politician, claimed Coutts, owned by NatWest, attempted to close his account due to his political views.
This accusation sparked a broader debate on the authority banks wield in terminating personal and business accounts and their justifications for such actions. New statistics indicate that businesses, in particular, are experiencing a surge in account terminations, with debanking-related complaints from companies jumping 81% to 666 this past year.
Abby Thomas, the chief executive of the Financial Ombudsman Service, confirmed these figures in a letter to the committee. Additionally, the data highlighted an increase in the success rate of these complaints, with 36% now being upheld in favour of the complainants, up from approximately 27%.
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Ms Baldwin stated: "When we set out on our inquiry into financing for small and medium-sized businesses, we weren't necessarily expecting de-banking to emerge as a key issue. But as they say, you must go where the evidence takes you and it's clear there is evidence that some legally operating businesses are being unfairly debanked."
"Banks should be doing all they can to support small business in this country, not pulling the rug out from beneath them with little warning. I expect our report will have something to say about what we've uncovered."
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