Brexit Wars Ep IV: The Return Of The Disingenuous Grifter

Nigel Farage is clearly a man who divides opinion, and that divide isn’t necessarily split down the middle.

He is also a man who knows how to milk the media for all its worth. Is his latest attention grabbing merely a stunt or is this something everyone should be concerned about?

What started off as a 'poor me' story has, like a rolling stone, kept on gathering momentum. To date, it has resulted in the resignations of two top bank executives.

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Just in case you’ve missed the story, or simply choose to ignore it, here is a quick summary of the saga to date.

Some time earlier this year, Nigel Farage was informed by Coutts (high net worth private banking arm, part of the Nat West Group) of their intention to terminate their banking relationship with him.

On 1st July, Farage responded in typical fashion by taking to social media, accusing Coutts of de-banking him because of his personal politics.

Coutts immediately denied Farage’s allegations, saying that they do not comment on individual clients, but that they have “a clear and consistent process for reviewing all our relationships” and that they "do not discriminate on political grounds.

Two days later, the BBC ran an article with the headline, "Nigel Farage bank account shut for falling below wealth limit".

Farage responded on 23 July by publishing a 40-page document that he obtained from Coutts through a subject access request, which shows all the evidence that the bank accumulated about him to justify their decision. The document includes references to his involvement in Brexit, UKIP, the Brexit Party, and various controversial statements and actions.

(Here is a clip from the dossier which is a classic case study of don't put to paper what you wouldn't want to say to someone's face. I have included a summary of the dossier at the end with a link to the document for those in need of sleep.)

The dossier, prepared by Coutts' Wealth Reputational Risk Committee, contained numerous references to news articles and social media posts demonstrating Farage's views. These views, according to the bank, were not aligned with its own. It acknowledged however, these views alone were not sufficient grounds for terminating an account.

It also revealed Farage's mortgage was due to expire in July 2023. It noted that since Farage's account had been below the bank's commercial criteria for some time, they could use the end date of the mortgage as a reason to terminate the relationship.

Farage stoked the fire and ignited a debate about the rights of banks (and businesses in general) to terminate accounts based on political views and reputational risk.

Cue a huge media pile on, including Prime Minister Rishi Sunak and several members of his Conservative government condemning the bank's actions, characterising them as an affront to free speech.

On 26 July, NatWest Group CEO Alison Rose admitted to discussing Farage's account details with a BBC reporter, prompting an apology from the broadcaster. She was subsequently sacked from her position.

That’s was not enough for Nigel, who moved to calling for the resignation of the entire NatWest Group executive board and a regulatory overhaul of Britain’s banking sector.

The following day, Coutts Chief Executive Peter Flavel stepped forward as the reluctant sacrifice.

Phew!

Were Coutts Wrong?

Initially, feelings seemed pretty much split on this one, with the right wing media lambasting the bank with the left wing media coming up with all sorts of reasons why this was a non-story and should be ignored.

However, the longer it has gone on, the more the scales are tipping in Farage’s favour. Even Keir Starmer, speaking on Radio 5 Live, said he felt sorry for Farage due to such a flagrant breach of confidentiality involving his personal details.

Client Confidentiality

First let’s deal with the issue of Coutts leaking personal details about a client, which are unforgivable.

NatWest Group CEO Alison Rose attempted to deflect the story by leaking information to the BBC, asserting that they did not consider his political views when, in fact, it is clear they did.

This is a clear violation of client confidentiality. Such a breach has harmed the reputation of a bank that let’s not forget, has been bailed out by, and it still owned in large part by, the UK taxpayer.

We often deal with clients who are acquainted with each other. We draw from similar circumstances to provide advice, but we never disclose any specific client's situation to others. The breach of client confidentiality in this case is the most concerning and underscores the importance of maintaining strict confidentiality in all client interactions.

People's Right to Banking

A recurring point that is being put forward is that everyone should have the right to access to banking services.

However, everyone in the UK already does have the legal right to a basic bank account as part of the European Union's Payment Accounts Directive.

Coutts are not a basic bank and do not provide basic banking services. Farage was not completely cut off and was offered alternative banking services with NatWest (or so Alison Rose claimed).

I've seen clients exited from Coutts for similar reasons and other retaining significant amounts in Coutts in order to continue to benefit from their far from basic service.

While it may seem harsh, this is the reality of high-net-worth banking. Personal bankers are constantly available by phone, a real person, who can sort issues immediately. Quite the opposite being offered to most retail banking customers who have seen a push to online only services following significant branch closures.

Is It Right For The Bank to Determine Which Clients to Exit?

A key ethical question is whether it's right for a bank to decide which clients to exit based on their public profile and political views.

Banks, like all businesses, have the right to choose their clients. However, these decisions must be made within the confines of the law.

For instance, businesses cannot discriminate against potential clients based on protected characteristics such as race, gender, age, or disability.

Coutts is well within its rights to exit a client that falls below what they refer to as their Economic Contribution.

However, in my personal opinion, this is extremely bad practice.

We have minimum fee agreements in place, which have increased over time, but we have never once asked a client to leave if they have fallen below that amount. It's important to remember the people who got you there.

The final questions are therefore: Did Coutts exit Nigel Farage because of his political views and if they did, is it acceptable for any businesses to deny their services to someone because of their political views?

My opinion to the first part is no.

Nigel Farage has been in a public figure with pretty consistent views for some time. This means there was a point Coutts were prepared to keep him on despite the views.

While it is clear they were keeping him on a tight watch due to his political views (including potential links to Russia), the report clearly states his views are not sufficient to exit him on their own.

Just how many people are banks scrutinising to such an extent and what is the tipping point for exiting a client. This may give us the answer to the second part of the question, are a business, in particular and bank, justified in taking account of someone’s political views.

In conclusion, while Coutts was within its rights to exit Farage as a client, the saga raises important questions about the role of political views in banking decisions.

In a fair society, where someone has not broken the law, should their political views be a factor in such decisions?

Regardless of personal opinions on Farage, the answer must be no.

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The Report

The report, spanning an extensive 40 pages, makes turgid reading (link to full document here), and brings to light the depths of a bank’s review process. It scrutinises Farage's public profile, his controversial views, alleged connections to Russia, and his commercial viability as a client.

The sheer size of the report is significant, indicating an unusual level of scrutiny that naturally begs the question: how many other customers are subjected to such rigorous scrutiny?

While the exact numbers will never be known, it's reasonable to assume that any high-profile client or those posing potential reputational risks would undergo similar reviews.

Here are the simplified key points from the internal report:

1. Despite negative press and allegations of Russian ties, Nigel Farage (NF) has not been formally charged or sanctioned. He is a current customer of the bank with a mortgage due to expire in July 2023, which the bank does not plan to renew.

2. The bank is considering a gradual exit strategy to coincide with the mortgage's expiry. However, an earlier exit may be considered if an event occurs that increases the bank's reputational risk.

3. The bank acknowledges the reputational risks of banking NF due to his controversial views, which are at odds with the bank's inclusive values. The decision to exit NF is not political but is based on inclusivity and purpose.

4. The bank will continue to monitor NF and conduct monthly adverse press checks.

5. NF was reviewed in 2018 due to allegations of Russian ties, but these were unproven. The bank has decided to continue the relationship, not just focusing on the Russian connections.

6. NF has recently been declassified from a higher risk PEP to a lower risk PEP, and if he remains out of politics for the next 12 months, he will be declassified completely.

7. The report discusses the risks associated with NF, including reputational risk and financial crime risk due to alleged Russian connections. If the bank decides to exit NF, there is a risk that he would publicise this decision.

8. The report concludes with a recommendation to continue the relationship with NF, subject to an annual review. This is based on the fact that while NF's views do not align with the bank's values, his engagement with the bank has been professional, polite, and respectful.

9. The bank acknowledges that many of NF's behaviours do not align with its values and present a reputational risk. The bank's purpose and values, particularly in relation to diversity and inclusion, climate change, and social mobility, do not align with NF's public comments and actions.

10. The bank proposed to continue the banking relationship with NF despite these risks.

11. If the decision to exit is agreed, the bank recommends giving advanced notice that they do not have the appetite to renew his mortgage or provide banking facilities after the fixed period expires in July 2023.

12. The bank has made a commercial exit decision on the account of Nigel Farage due to the relationship being below commercial criteria for some time. The decision was taken to exit upon repayment of an existing mortgage. The exit was expected to be in Q3 2023, however, the mortgage has now been repaid early, triggering an earlier notification of exit to the client.