The UK Financial Ombudsman Service has received a surge in debanking complaints in the past year, coinciding with furore around Nigel Farage and NatWest Group (LSE:NWG)
New data from the FOC shows the number of complaints increased by 69% to 3,858 since the 2020/21 financial year.
Last year, saw a 44% increase, including an 81% year-on-year rise in debanking claims by small businesses looking to settle complaints with banks. The FOS data was revealed today by the Treasury Committee.
More than 140,000 business accounts were closed in the past year by major banks (Barclays, HSBC, Lloyds, NatWest, Santander, Metro, TSB and Handelsbanken), according to previous data collated by the committee.
Complaints in relation to ‘restricted account closures’, which include concerns about financial crime or money laundering concerns, as well as those related to politically exposed persons, have almost trebled since '20/21.
The FOS ruled against banks only 36% of the time in the most recent year, though this was up from 27% or below in each of the previous three years.
Committee chair Harriett Baldwin said: "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 de-banked.
"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."