How Do I Deal With a UK Community or Charity Bank Account Problem?

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 resolve problems with bank accounts.

Charity bank problems are unlikely to go away, so we're asking charities to tell us who the best and worst banks are and we'll publish the results, once we have enough respondents.  Please complete our short charity bank survey.  Add your e mail and you'll be sent a copy of our findings.

We also have a guide to opening a UK community or charity bank account, with details of the main providers.

Problems In Opening A UK Community or Charity Bank Account?

The main problem in opening a charity bank account appears to be bank staff refusing 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.

There have also been problems with where community and charity bank 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 deal with this problem in opening a charity bank account.

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.

Problems With Banks Threatening To Close Community and Charity Bank Accounts

For some time, there has been a problem with banks blocking some community and charity bank accounts on the basis of security and I'm now hearing of problems with banks threatening to close existing accounts on the same grounds. Dealing with this problem usually requires the charity to produce some combination of internal financial control, due diligence, sanctions, money laundering, or anti-bribery policies and procedures.

My response to these problems with banks 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.

DEALING WITH UK CHARITY  BANK ACCOUNT PROBLEMS - RESOURCES

Charity Bank Account - Consumer Duty

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.

Charity Bank Account - Banking Ombudsman and Complaints 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.

UK Charity Regulators - Letter to the UK Banks

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:

• Having accounts closed.
• Loss of bespoke services.
• No access to online banking.

Where Can I Find Out More About How Banks Assess Charities?

This article from our friends at ICAEW, explains how the banks assess charities and what they're looking for.

COMMUNITY AND CHARITY BANK ACCOUNT PROBLEMS - TEMPLATES

How Do We Respond To A Bank Request for Information?

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. 

How Do I Complain To Our Bank About Our Charity Bank Account?

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.

• Be clear about what the issue is and support this with facts/evidence/argument.
  • On date x, the bank refused our application, on the basis of y, but did not take properly into account a, b, and c from our e mail of date d.
• Do not state your opinion as fact.
  • Not, your bank is totally useless.
  • But, in my opinion, your bank is totally useless. But!
• Do not use inflammatory or threatening language either.
  • In my view, your bank is unreasonable and is wrong.
• Consider taking any reasonable action to address the bank's issues.
  • For example, provide the information about your charity the bank may be asking for.
  • I've written a number of policies specifically to respond to common banking issues.
    • Internal systems of financial control.
    • Due diligence - for the OFSI charity sanctions guidance.
    • Money laundering.
    • Anti bribery.

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.

• Be clear and realistic about what you want the Commission to do in response.
  • Not, we demand the bank pay us the £100k we've in lost funding...........
  • But, we wish to bank to apologise and to open our charity bank account within the next 30 days, or similar.

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.