October 3, 2023
Aspiring lawyers interested in practice areas such as finance, banking, public law or even politics more generally will likely be following the FCA’s investigation into politics and bank accounts.

What Is The Context?

A timeline of events needs to be constructed in order to understand how the situation has developed to this point. 

In late June 2023, Nigel Farage was contacted by Coutts bank to inform him that they would be closing his account. The initial letter supposedly included few details, but he was later informed it was down to a ‘commercial decision’. Farage immediately took to Twitter to claim he had been the victim of a targeted political attack, blaming ‘the march of woke corporatism’ for the issue.

The BBC reported in July that the actual reason for his account closure was the fact that his funds had dipped below Coutts’ minimum savings threshold for their clients (£3 million). At this point, it was generally being reported that politics was not the reason for the account closure.

However, Farage soon explained that he received a 40 page document from Coutts detailing the full reasons for his account closure. The reasons provided included:

At this point, it became clear that Farage’s account was indeed closed as a result of political factors. Rishi Sunak even chose to comment, stating that ‘no one should be barred from using basic services for their political views. Free speech is the cornerstone of our democracy’. 10 more banks would go on to deny Farage access to their services. 

Farage has been broadly labelled a PEP (politically exposed person) by the banks in question – something other political figures such as Jeremy Hunt have also experienced.

Under mounting pressure from various authorities, Alison Rose (CEO of NatWest, the owner of Coutts) stepped down from her position after 27 years, mostly as a result of disclosing confidential information within the context of this story.

What Is The Financial Conduct Authority Doing?

The Financial Conduct Authority (FCA), essentially the UK’s financial regulator, was soon called in to act. An early report from them (after just a month of investigations) has now concluded, to much amazement, that the issue of politicians being denied bank accounts as a result of their political views is essentially non-existent. 

The findings include the fact that, after surveying 34 banks, not a single one appeared to have closed an account ‘primarily because of a customer’s political views’ in the last 12 months. The main reasons it did find for the closing of such accounts were:

  1. Dormant accounts (a general issue surrounding bank accounts which has nothing to do with political views)
  2. Financial crime threats (often tied to the ongoing Russian invasion, thus maintaining some political element, albeit not as direct as those cited in Farage’s case)

Farage has called the claims ‘a complete and utter farce’, while the FCA is now promising to conduct a more thorough investigation in the coming months.

What Is The Treasury Doing?

The Treasury have also weighed in on the issue, promising legislative reform. Some of the ideas currently being discussed include a compulsory three month notice period for banks looking to close customer accounts, plus a more rigorous appeal process for those who have their accounts closed (including the requirement for a full explanation for the reasons behind the account closure).


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Could Nigel Farage Take Legal Action?

The FCA’s director of markets, Sarah Pritchard, has publicly acknowledged that ‘it is unlawful for a customer to lose access to their bank or building society account because of their legally expressed political views’.

Farage has now expressed an interest in taking legal action against Coutts owner NatWest – including for defamation. He also tentatively suggested he might attempt to initiate legal proceedings against the BBC (for misreporting on the low funds issue), but this case would likely be far more complex.

What Should Aspiring Lawyers Know?

The Nigel Farage saga creates a great deal of talking points for aspiring lawyers within applications and interviews for vacation schemes, training contracts, pupillages, etc.

First, it is worth noting that this story is relevant to a range of practice areas, including both banking and public law. More importantly, this story highlights the importance of the intersections between different practice areas (as is extra important in the contexts of firms and chambers operating with large teams across different areas of the law).

Another point of consideration is the complex relationship between different authorities – in this case, the FCA and the Treasury. 

Third, you might think about or discuss how reputation plays a key role in the management of businesses (and how it can materialise into litigation if things are handled in a certain way).

Finally, and perhaps most intriguingly, you might consider the intersection of law and ethics, whereby discussions arise surrounding the existence of free speech and other political issues. Should banks have the right to close accounts based on political views? Where do we draw the line – if Farage is allowed, does this privilege extend to those with more extremist views? As private institutions, should banks have such strict regulations placed upon them? And does Farage’s position as a free market supporter appear hypocritical in light of the previous question? While there are no ‘right’ answers, demonstrating an ability to think deeply about these kinds of issues is invaluable in the eyes of prospective employers.

Commercial Awareness Questions

Many law firm ‘assessment centres will be consist of some interviews based on broader questions around yourself and the firm, and other interviews based purely on trying to test your commercial awareness. Here’s our round-up of questions to challenge you to look more deeply into this topic:

  • Should there be more or less strict regulations set on banks?
  • Which practice areas in a law firm are relevant to this and why?
  • What are the potential legal implications for the bank’s actions?
  • What does this case tell us about the relationship between the FCA and the treasury?


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