Here's how to deal with community and UK charity bank account problems, either in opening a bank account of being threatened with your existing account being closed. I've summarised the most common problems, detailed organisations that can help and created 2 templates and resources you can use to complain. There is a separate guide to opening a UK community or charity bank account, with details of the main providers.
I've been advised of instances where bank staff have refused to open a charity bank account, on fairly dubious grounds, such as 'you have to be a registered charity', when you don't. I suggest checking the bank's charity and community account information on their website, before you approach them.
I've also been advised of instances where charity accounts have been refused, on risk grounds, because they work in parts of the world, such Africa and Southern Asia. The banks often ask for policies around sanctions, money laundering etc. See the complaints template below for charity policies I've created to enable you to respond to this.
However, for international funding transfers, specialist providers can often offer better rates than the big banks, so if you need to do so, it might be better to apply just for UK banking.
For some time, banks have blocked some community and charity bank accounts on the basis of security and I'm now hearing of banks threatening to close existing accounts on the same grounds. Albeit much less frequently, I have also seen the Charity Commission use similar tactics in objecting to charity registrations. What is usually required is for the charity to produce some combination of internal financial control, due diligence, sanctions, money laundering, or anti-bribery policies and procedures.
My response has been to upgrade our existing policies and to create new ones for charities and community groups who need these. All of the above policies can be downloaded from within Charity Excellence. The OFSI sanctions guidance for charities is in the due diligence policy. You need to register, then login, then ask the in-system AI bunny how to download these in Word format. We now have 40+ policies, help yourself. Everything is free.
In February 2023, the Financial Conduct Authority (FCA) wrote to all banks and building societies spelling out their Consumer Duty responsibilities. The following may be helpful to quote if you have a problem with your community or charity bank account.
This makes clear the expectation that for banks Consumer Duty (is) to be a top priority and includes small charities with income under £1m. The Duty requires firms to act to deliver good outcomes for customers.
Firms must act in good faith towards customers, avoid causing them foreseeable harm, and enable and support them to pursue their financial objectives. Firms should consider the diverse needs of their customers – including those with characteristics of vulnerability.
It also includes new rules on products and services, price and value, consumer understanding and consumer support.
If you complain to a bank or building society and they don't deal with your complaint or you are unhappy with their answer, you can ask the Financial Ombudsman Service (FOS) to deal with the dispute. Here's guidance from Citizen's Advice.
The Business Banking Resolution Service (BBRS) may also be able to help. It's a free, independent dispute resolution option for customers of Barclays Bank, Danske Bank, HSBC UK, Lloyds Banking Group, NatWest Group, Santander and Virgin Money. Complaints must relate to incidents that took place on or after 1 April 2019.
In November 2023, the UK charity regulators wrote to the banks highlighting the difficulties charities experience in opening a bank account and maintaining a banking relationship. In particular:
Outlined below is a letter I drafted for a charity to go with the various supporting policies I created, which you might wish to amend to meet your own needs. The policies they usually want are above, including guidance on how to download these, once you've registered and logged in.
We are a small charity with transactions that are tiny in comparison to commercial companies and major aid organisations. We work with some of the poorest and most vulnerable providing them with the basic essentials of life, such as food, water and shelter. Nonetheless, the trustees appreciate the risks in operating internationally, have risk assessed these and monitor these on an ongoing basis. The vast majority of our donations are small, from individuals we either know or who have been identified, and zakat is specifically for the purpose of alleviating poverty. For us, an anonymous donation is £20 dropped into our collection at prayers.
We do not have connections to senior political or business individuals who may fall within the remit sanctions, we are not involved with valuable cultural items and we do not work with goods that might realistically be considered dual purpose. The likelihood of funds being donated for inappropriate purposes, or a significant anonymous gift or money laundering or breaching sanctions are extremely low. Notwithstanding that, we have comprehensive and robust procedures in place that cover all of these and the other issues you have listed below. Moreover, there are links in our policies that tie back to the detailed source guidance on these and other issues, such as end use of funds, designated persons and tainted donations.
The above enables the trustees to be justifiably confident that all reasonable steps have been taken and the risks have been significantly and adequately mitigated. Please find attached our policies that cover all of the issues you have raised, which are not only fully compliant with but also exceed the guidance issued by not only the charity regulator but also HMRC and the OFSI.
In considering the above, we request that you take into account the correspondence of this issue from the regulators. The Financial Conduct Authority (FCA) letter to all banks in February 2023 detailed your Consumer Duty responsibilities, specifically referenced charities and included their expectation that compliance with this would be a top priority for you. We also draw your attention to the subsequent letter from the UK charity regulators to the bank CEOs in November 2023 raising concerns about the quality of service you provide to charities.
You may well feel angry, but the purpose of your complaint is to get the bank to address your concern, so you need to make your case politely and well. Here's a template that might be helpful.
If you want any of these policies, register, then login (everything is free). Click the AI bunny icon, then his policies button , then tell him which one you want and he'll hop off and get it for you.
When I write something when I'm angry, or which I think may not go down well, I never send it immediately. Instead, I leave it for a day or so and then read it again and redraft it. Sometimes extensively! Alternatively, ask someone you know to read your draft complaint and give you honest feedback on how you might improve it, based on the points above.
This Article Is Not Professional Advice
This article is for general interest only and does not constitute professional legal or financial advice. I'm neither a lawyer, nor an accountant, so not able to provide this, and I cannot write guidance that covers every charity or eventuality. I have included links to relevant regulatory guidance, which you must check to ensure that whatever you create reflects correctly your charity’s needs and your obligations. In using this resource, you accept that I have no responsibility whatsoever from any harm, loss or other detriment that may arise from your use of my work. If you need professional advice, you must seek this from someone else. To do so, register, then login and use the Help Finder directory to find pro bono support. Everything is free.