The issues
Bank closures and a move to digital have resulted in a lack of client facing bank staff that have knowledge of the voluntary sector legal structures. Having to update the business bank profile digitally has caused issues as the bank uses language that is unfamiliar or inappropriate for charities, and some digital processes are not user friendly eg not explaining why the uploaded documents are not accepted. In many, if not most, cases, the banks’ processes and requirements are designed for businesses, which causes significant problems for voluntary and community organisations.
Issues have also emerged with the banks’ over-zealous approach to prevent fraud, money laundering, and terrorist financing. Some banks are now asking for more detail from charities about their whole board/committee members and not just the account signatories. Each bank has its own specific requirements and processes. If your bank is asking you for information, even if you have already supplied it several times before, please do not ignore it as they could freeze your bank account if you don’t comply with their request or even worse, close your account.
New organisations wanting to open a bank account for the first time have also been left frustrated with the wait time to open an account, sometimes taking several months with High Street banks. The introduction of monthly fees on some bank accounts has also left limited options of free banking for charities.
What is being done
This is a UK wide issue and we have been working with other representatives of the voluntary and community sector (the *Civil Society Group) along with the charity regulators across the UK to highlight these issues and seek an improved offer from the banking sector to the voluntary and community sector.
Part of this work involved working with UK Finance to both highlight the many issues to the banks. UK Finance’s response was to create a banking tool that would encourage better understanding of each other eg legal structures used by the voluntary sector and processes and language used by the banks. Various working groups were set up to develop different aspects of the banking tool, which we engaged with.
We recently met with the Consumer Council to highlight the extent of the issues and as part of the Civil Society Group we have also met with Treasury officials, charity regulators, Competition and Markets Authority and will be meeting with the Financial Conduct Authority in September.
The Charity Finance Group’s ‘charitable sector banking forum’ met for the first time this week and we will meet again in autumn. There was a good number of officials there from different banks which was encouraging.
Each of the charity regulators across the UK issued an open letter to the UK’s main high street banks in November last year requesting that banks take urgent action to help charities have access to proper banking services.
Much time and effort has been spent to date on highlighting the issues to the key stakeholders and we will continue to work as part of the Civil Society Group to advocate for better banking for voluntary and community organisations.
If you are looking to open a bank account for your organisation then please see NICVA's updated comparison table of bank accounts available to organisations in N.Ireland.
UK Finance has also recently launched its voluntary organisation banking guide which includes a glossary of terms used by the banks and an account finder, however it doesn't include a comparison table or the wait time to open an account.
*Civil Society Group members
NICVA , WCVA, SCVO, NCVO, Charity Finance Group, Muslim Charities Forum, ACRE (Action with Communities in Rural England), NAVCA, Girlguiding, Foundation Scotland.
Charity regulators
Office of the Scottish Charity Regulator, Charity Commission for Northern Ireland, Charity Commission for England and Wales
