Bank Services

Treasury written question – answered on 9th July 2020.

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Photo of Wera Hobhouse Wera Hobhouse Liberal Democrat Spokesperson (Environment and Climate Change), Liberal Democrat Spokesperson (Energy)

To ask the Chancellor of the Exchequer, for what reason a bank is not required to give an explanation before closing a customer's account.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

In most circumstances the provision of a bank’s services are a commercial decision for the bank. The terms and conditions of the contract between the two parties govern the termination of that contract, and the Government does not intervene in these decisions. Although the Treasury sets the legal framework for the regulation of financial services it does not have investigative or prosecuting powers of its own.

In line with international standards on money laundering and counter terrorist financing set by the Financial Action Taskforce, banks are expected to apply risk-sensitive customer due diligence measures when considering the services they provide to current or potential customers. Banks should then make a decision on whether and how to provide banking services on the basis of an assessment of each customer’s circumstances. The decision of whether to provide banking services may, of course, be informed by more than just the bank’s risk appetite and may include an assessment of profitability or other commercial factors.

The treatment of customers by UK firms which are regulated by the Financial Conduct Authority (FCA) is governed by its Principles of Business. This includes a general requirement for firms to provide a prompt, efficient and fair service to all their customers.

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