Every morning at breakfast, the City banker would tell me the latest.
We were staying in the same hotel in Greece and being an early riser, and glued to Bloomberg and the markets news, he would wander over to our table to fill me in.
Inevitably, given what was occurring, it was about Nigel Farage and the ex-Ukip leader’s running spat with Coutts and the bank’s NatWest parent. Frequently, he wanted to express his anger at the latest twist.
Now back in London, in the City quietened by people away on holiday or using August and the slacker period as an excuse for extended WFH, there is also considerable dismay and frustration.
What’s powering the backlash is twofold: that having taken the decision to ditch him as a client, Farage is apparently in talks with Coutts to retain his account; and that the populist crowd rouser has formed an anti-banking website.
In truth, the bankers and regulators don’t know how to handle someone like Farage, which is why Coutts’ original move to turn away his custom was so ill-conceived – it was always going to end terribly.
Yes, Farage may not have fitted with the bank’s heightened woke values but there are plenty of folk still with Coutts accounts who don’t either. Others expelled don’t know how to rebel or to galvanise a revolution as he can. Ironically, it’s that point, which rebounded so spectacularly on Coutts: the ever-so elitist (as it sees itself) private bank did not want the association with him.
Even if there was an issue with his ability to meet their criteria of holding £1 million in investments or loans or £3 million in savings – and that seems open to doubt – the act of shutting Farage down was bound to provoke a ferocious response. Add to that the bank’s incredibly cack-handed compilation of a 40-page dossier on his previous utterings and actions, coupled with the NatWest chief executive’s discussion, however vague, about his financial affairs with a BBC reporter, and it was game, set and match to the professional slayer of the Establishment.
The result, apart from senior heads rolling at NatWest and Coutts and the group chairman’s ordering of an inquiry by a City law firm, which will be followed by the financial regulator’s own review, is the destruction, as many bankers see it, of their historical secrecy and a brake on their
Banks close thousands of accounts a year with scarcely a murmur. Now, thanks to the Farage farrago, customers are aware they can make use of what was hitherto an obscure tool under data protection legislation, of the formal Subject Access Request or SAR, to find out what the bank is holding on them. That’s how he discovered the 40-page report; that’s how, going forward, banks can expect to be swamped with similar requests.
Suddenly, you get a picture of bank staff urgently reviewing all the personal details they’ve gathered and deleting like mad.
By law, UK banks are not meant to shut accounts or deny services solely because of someone’s political ideology. Likewise, they are allowed, indeed legally required, to bar customers they suspect of money laundering.
The problem exists in the middle, regarding Politically Exposed Persons or PEPs. These are people who hold or have held public office and therefore may be more susceptible to bribery or corruption. The Financial Conduct Authority requires the banks to apply extra diligence to them, to raise the bar as to establishing the sources of their wealth.
Examples would include heads of state, politicians, senior members of the armed forces, judges, board members of central banks. In fact, there is no definitive list, and it includes not only them but family members and close associates. It was meant to cover kleptocrats, organised crime groups, terrorists, as an extra barrier to the washing of dirty money, but application of the regulations is blurry and the banks are allowed pretty much free licence.
The difficulty is they have become so nervous about their corporate reputations, anxious not to be outed by campaigners, that in some cases, they’ve allowed fear to take over. This has resulted in them applying their own values, which are at odds with those of clients.
So, anyone they regard as ‘extreme’ or likely to attract negative publicity from any quarter can be dragged in. Since Farage launched his attack, other well-known figures have come forward to say that they, too, have had trouble finding a bank.
Since banks were on the Remain side during the toxic EU debate, this has led to accusations they’re seeking revenge on Brexiteers. As the last few years have illustrated, the hangover from that turbulent period still lingers – those identified with either side of the dispute love to attach blame and labels. So, the banks are regarded as coming down heavily against those who persuaded the country to leave the EU – something Brexit-supporters and their friends in the media are publicly relishing.
Accompanied with this is the persistent widespread feeling that the banks and their bosses never paid the price for causing the crisis of 2008. This, and the taxpayer-funded bailout, followed by government austerity measures, makes them in the eyes of many a ready target.
Add to that, branch closures, high charges, slowness to pass on increases in interest rates to depositors and thumping profits, and they’re public enemy number one.
No one has a good word to say for them. No politician of any persuasion will speak on their behalf, the press sees them as fair game – they are there to be kicked mercilessly.
Allied to that is their own crass PR. They might be run by intelligent executives but too often these same chieftains lack empathy.
The upshot is the banks must reform how they conduct themselves, how they speak, what they say. They should look in the mirror and ask how they’re seen. Crucially, instead of being superior about it and falling back on management-speak and procedure, which translates to gobbledygook, they ought to embrace the society they’re part of and put themselves in the position of the consumer. Not easy, when you’re able to hide behind high-security doors and complex money matters and you’re earning mega-sums.
It should have been done long ago. As they’re finding out, via Farage, they no longer have a choice.