UK Financial Conduct Authority Reports on Payment Account Access and Closures

The Financial Conduct Authority has published a report setting out the findings from its follow-up work on payment account access and closures. The report follows on from the FCA's 2023 report, UK Payment Accounts: Access and Closures, which detailed findings from an initial review of issues relating to payment account access for both individuals and organizations. The 2023 report arose from the "de-banking" of higher risk or less profitable clients by several institutions and scandals in the U.K. involving account terminations of some politicians.

This new report sets out four thematic findings from the follow-up work the FCA has carried out, which are as follows:

• Basic bank account customer journeys varied, leading to differences in apparent rejection rates, and firms were poor at making customers aware of Basic bank accounts.
• Data on account access was limited or unclear.
• The FCA did not see evidence of political beliefs or other views lawfully expressed being used as a rationale for account denial, suspension or termination.
• "Reputational risk" is used in varying ways by different firms to deny or close accounts.

The FCA also received feedback from stakeholders that some firms' approach to implementing financial crime controls can create difficulties for consumers. They also raised concerns that some customers in vulnerable circumstances are experiencing worse outcomes regarding account access.

The FCA summarizes its expectations of payment account providers, including in respect of the Consumer Duty and identifies a number of areas for improvement for payment account providers. Firms are expected to take note of the detailed findings, expectations of firms and next steps and should review their approach to account access and, if necessary, make improvements. In the coming months, the FCA expects firms to be able to evidence that its concerns have either been addressed or are about to be addressed in a reasonable timeframe.

In addition, the FCA also published independent, qualitative research on the experiences of some of the most financially excluded consumers when accessing and using financial products and services. The FCA believes that the research report will help industry and consumer groups understand how the right support can help these consumers effectively access services. Earlier this year, HM Treasury published a policy note and draft legislation to enhance the requirements governing payment account terminations.

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