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A picture of the outside of a branch of NatWest

Beware who you act for


Following the ousting of NatWest's chief executive Alison Rose, Philip Fisher reminds readers that acting for politically exposed persons is fraught with risk.

28th Jul 2023
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Former UKIP leader Nigel Farage and his supporters in the media have made hay during the quiet news month known as the silly season with a story so frothy that it should be an embarrassment to editors.

Farage vs Coutts

Why would the public be interested in whether a TV presenter can afford an account with Coutts?

A good number of banks offer accounts that are designed for the very wealthy and, not unreasonably, put qualifying conditions on those to whom they wish to offer elite status, often with valuable perks as an incentive.

Surely it is their prerogative to reject those who cease to meet the criteria, which Farage originally accepted was the case. The NatWest group even generously offered him a more affordable account, rather than merely turning its back. It is worth observing that according to Farage, a number of other banks also refused his custom.

Bizarrely, Coutts/NatWest subsequently apologised implying that failure to qualify was not the reason, which makes no sense since they offered the NatWest account as compensation.

Reputation mismanagement

Subsequently, Farage has demonstrated that the powers that be at the Royal bankers had an ulterior motive – their reputation.

This is where NatWest went wrong. They should surely have been honest in the first place, stating more clearly their full reasons for wishing to transfer his account, assuming that they were permitted to do so (more on that below).

This is where the issue could easily extend to our own practices. It is hardly unknown for firms of accountants to decide judiciously that a prospective client may not enhance their own reputations, should the word get out that they are acting. Rather than focusing exclusively on Farage, it would be worth extending the example to consider the position if, for example, other contentious political figures such as Jeremy Corbyn or Vladimir Putin sought our services.

It's not hard to imagine a situation in which an accountant would wish to say goodbye to a long-standing client as he or she was uncomfortable about acting for them for any number of reasons, which could include reputation.

Reputational risk

To add to the complexities, there are enhanced Know Your Client requirements where individuals are politically exposed persons. Many of us really can’t be bothered to put up with the hassle of extra work during the sign-up process with the prospect of additional problems building up further down the line.

One thing that seems almost certain is that the politician involved will kick up a massive fuss if you increase their fees to cover the additional costs. If nothing else, many people who achieve this esteemed status have an inflated view of their own value and a strong desire to argue – just try listening to debates in the House of Commons.

The reputational risk becomes more apparent when you look at what has recently happened to Johnston Carmichael, after the police decided to take a close look at the financial status of the Scottish National Party.

The situation can become even more fraught, should you have the misfortune to deal with any client whose activities require you to make a report under the Proceeds of Crime Act 2002. That is likely to be a trigger to part ways with your client as a matter of urgency but, awkwardly, you cannot offer any justification that might risk tipping them off with regard to the existence of an investigation.

Nightmare clients

Most accountants would also reasonably wish to have the right to pick and choose their own clients. Judging by the fuss that he has made in the last few days, Nigel Farage would be the client from hell.

Depending on your outlook, high-profile clients are either a godsend who will help you to market your services or a nightmare in waiting.

Would you really want to see your firm besmirched on the front page of the Daily Telegraph and Daily Mail because a client decided to take umbrage?

Periodically, we all have to take difficult decisions when potential clients who could pay good fees for years arrive on your doorstep with what could be unnecessary baggage.

A proportion of accountants and other professionals might take an ethical stance when it comes to armaments manufacturers, gambling groups or individuals with strong, publicly shared views that might be classified as racist, anti-Semitic or homophobic. 

It goes much further. Some members of staff or partners might feel deep discomfort if asked to work for clients with views that they find abhorrent and may even decide that yours is not the firm they want to work for. Similarly, if word got out that you were acting for a high profile, controversial individual or organisation, clients might also decide to head for the hills.

The right to reject or sack a client

Whether we might love or hate Nigel Farage, Jeremy Corbyn or any one of a thousand other politicians, surely, we would all defend the right of any accountant (or banker) to reject or sack a client for whatever reason, without being taken to task by the media and, in this case, apparently the Prime Minister, Chancellor of the Exchequer and the Home Secretary to the point where you lose your highly regarded CEO.

To many, there argument that Coutts/NatWest is preventing free speech by asking a customer to bank with a different part of the organisation will also seem specious in the current situation.

Replies (8)

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By Runagood Team
28th Jul 2023 09:57

Surely a bank account is a human right??

Thanks (1)
Replying to Runagood Team:
By Hugo Fair
28th Jul 2023 20:19

Not sure that's technically correct ... but I know what you mean, and agree that it is next to impossible to survive without an appropriate bank account (unlike say without an accountant) - and within a matter of days.

I don't usually directly castigate an author, but this particular article is chock full of inaccuracies (regarding both facts and their associated timelines).

And, unlike perhaps some of the others commenting on here, I'm not a fan of Mr Farage ... but the underlying principles that Coutts/NatWest were happy to trample all over really do matter. Witness today's News regarding one of Nigel's arch-enemies, who is suffering in a very similar way:

Thanks (1)
By andrewdodsworth
28th Jul 2023 09:57

Perhaps checking your facts first before writing anything should be what all journalists should do - the subject access request that Nigel made and NatWest responded to make it abundantly clear that commercial reasons were not the issue. Nigel only had a Coutts account because NatWest moved him to it because his business needed accounts in other currencies. When they debanked him without any reason given they only offered him a personal account which obviously was not good enough. The main issue though is why his personal financial details were discussed by the ex CEO of NatWest with a journalist and what are the GDPR implications - no doubt we will find out when the ICO completes its investigation.

Thanks (5)
By ajspipers
28th Jul 2023 10:32

"with a story so frothy that it should be an embarrassment to editors"
In addition to Andrew Dodsworth's valid points, might I disillusion Philip Fisher that this saga is all about Farage. He has been the catalyst to expose the unlawful (?) practice of de-banking law-abiding people based on their personal views. De-banking is not the same as de-accounting. Without being able to have a bank account, one cannot transact to survive in the current world: even cash needs to get topped up from somewhere! I hate to be the bearer of bad news but most people can survive without an accountant :-)
From the lightweight research and analysis exhibited in this article I suspect that Mr Fisher saw the name Farage and the blue touch paper was lit . . .

Thanks (4)
By raybackler
28th Jul 2023 10:35

Having followed this story closely, the developing part of it was surely all about the breach of confidence. Access to a bank account is more along the lines of using an electricity supplier. There is a basic human right involved. This is not true of accountants choosing the type of clients they want. There is no public blacklisting if an accountant doesn't want to deal with you. In this day and age we all need bank accounts and a supply of light and heat. It is simply wrong to make the comparison with accountancy clients. As to the free speech issue, I have more sympathy there for the reasons you outline. Big business caves into the vocal minority over and over again. Banks are no different in that regard. They have reputations to protect. The biggest damage to their reputation came from the breach of confidence. If they hadn't done that Nigel Farage would have moaned and most people would have ignored the storm in a teacup after a few days.

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By Springfield
28th Jul 2023 11:00

Firstly, Nigel Farage is not a PEP. Secondly, his account was closed because they did not like his political views.

The CEO's of both NatWest and Coutts have both resigned - the first thing they've done right in this whole debacle. They, and the jumped-up Coutts committee who trawled the internet to compile their schoolboy-level dossier should be suitably ashamed of themselves.

The RBS Code of Conduct for staff at the time Fred Goodwin was ousted contained the following guidance. "Do not take any action in your work which, if the details were published on the front page of your local newspaper, would embarrass your or your family."

It's poetic justice that Coutts, who were concerned that Farage might damaged their reputation, have ended up trashing it themselves.

I hope the author never finds himself in the position of having his bank account closed without good reason, only to then discover that in the very small world of UK banks he's on the unofficial naughty list and that no other bank will touch him.

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By indomitable
28th Jul 2023 15:33

The author obviously has not got his facts straight here and jumped like every other left wing commentator on the fact that it was Nigel Farage.

The banks behaviour here has been disgraceful and more importantly dangerous. Banks are in a privileged position in that it is impossible to function without a bank account.

To try and compare accountants to banks is 'absurd'

Let's get the facts straight. Mr Farage was de-banked and it was not before he had tried to open accounts with 9 other banks and then finally threatened to go public (which he did) that Nat West decided to give him a personal account and NOT a business account which he needed. These are the facts correct me if I am wrong.

The reasons for him being de-banked being that his views did not accord with the banks. This can be seen in the dossier that Mr Farage was presented with after his freedom of access request

The bank then appears to have discussed Mr Farage affairs with a journalist - not sure to what extent but this may come out in the ICO's and FCA's investigation

This has rightly resulted in the current stepping down of both the CEO of Nat West and Coutts.

IMO the chair person needs to go too and possibly some of the other board members.

Banks especially should not be able to refuse a bank account to anyone who does not break the law and who may have different views to the board of the bank. This is extremely dangerous as has been said you CANNOT function without a bank account.

I do not want to live in a fascist state where you can be cancelled, become a non person for holding different lawful views than a bank.

Sorry am I missing something??

How can the author even think the bank's behaviour is acceptable

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By moneymanager
28th Jul 2023 17:30

Taking this as a core principle would mean that no indicted criminal would ever be able to appoint a brief, just think about that.

In any case, this is NOTHING to do with any domestic UK issue but is becoming endemic and clearly for politically obstructive motives, JPM Chase has apparently closed long standing accounts for, that site used to be Google's No 1 search result for anything related to healthy and natural remedies, overnight Google cut its traffic by over 98 percent, essentially the company has been scrubbed from results, it just so happens that Dr Mercola has been particularly outspoken on many issues not least of which has been his and his interviewees opinions on the 'pandemic', he holds the bizarre position of being to of the 'Disinformation Dozen', of whom there are actually thirteen, closing banking facilities is just an extension of censorship.

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