The Financial Conduct Authority (FCA) has published a report with new findings on the difficulties charities have been facing in their banking experience.
It reveals that charities had difficulties meeting banks’ requirements on financial crime-related obligations as part of their due diligence requirements.
The financial regulatory body’s report also states that banks had difficulties processing charities that have “complex governance structures”, for instance, a charity that has more than 100 trustees.
“The charity representatives we spoke to, in particular, highlighted the difficulties that charities have had with fulfilling firms’ requests for information, either at the point of account opening or on an ongoing basis,” it reads.
“For example, we heard multiple times from charities that firms were requiring that all signatories to an account be present in branch when changing signatories.”
The updated FCA report is part of a cross-sector effort to ease charities’ banking experience after a Charity Commission survey in March found that 42% of charities had reported experiencing poor service with their banks.
CFG: ‘I’d like to see more happening and more quickly’
The FCA recently held a roundtable with banks and charity representatives to discuss the issues.
Clare Mills, deputy CEO of Charity Finance Group, who attended the roundtable, said: “It was a positive meeting.
“I felt the FCA representatives really understood the issues and were frustrated that so many customers were reporting bad experiences with their banks.”
However, Mills said: “I’d like to see more happening and more quickly.”
UK Finance, a trade association for banking and the financial sector, recently launched a website to guide charities in navigating the banking sector.
Mills said the guide could also be used by bank staff as a reference point to improve their understanding of how charities work.
When asked when the issue would be resolved, Mills said: “The progress will probably be uneven, and we will see different banks or different financial institutions addressing different bits of their system.
“There are issues within individual banks as to how they process information and how they manage customer relationships, and because each of the banks is an individual business, they do things in their own way.
“So, it's not as if there's one solution that’s going to fit everything.”
Commission: ‘Let’s keep the momentum around this issue’
Sam Jackson, assistant director of policy at the Commission, told Civil Society that the regulator has scheduled meetings with individual banks in the autumn to hear about the work they are doing with charities.
In a statement to the UK’s high street banks last November, the Commission, along with its sister regulators in Scotland and Northern Ireland urged the banking sector to address the “inadequate” services it was providing to the charity sector.
Jackson said there had been some progress and engagement since then “but we still think there's more to do, and it's an issue we're going to keep talking about, certainly to make sure that the action carries on”.
The Commission encourages charities to go to the Financial Ombudsman Service if their bank ignores their complaints or the response isn’t satisfactory, Jackson said.
“Don’t suffer in silence and let's keep the momentum around this issue,” he said.
The Commission’s survey in March 2024 showed that many charities experienced poor service from their banks such as account freezes, banks losing their records and challenges in complying with identity requirements set by their banks.
Related Articles
