Your Industry  

IFAs left in 'limbo' as banks deny business accounts

IFAs left in 'limbo' as banks deny business accounts
 Anna Shvets via Pexels

Financial advisers have been declined business accounts from several banks, FTAdviser has learned.

Kerry Lee, director of Independent Wealth Management Consultants, said she had experienced difficulty getting business accounts with several UK banks.

She told FTAdviser: "Banks are writing to IFA firms informing them they must move their bank accounts with little notice given or they will be closed.

"Having contacted alternative banks for facilities nearly all are taking the same stance that they will not offer banking facilities to companies registered with the Financial Conduct Authority, but no further explanation."

IWMC said Barclays had written to them last year, giving them eight weeks' notice that the company's account was to be closed "due to 2019 ring-fencing legislation to provide banking to business below £6.5m turnover".  

Yvonne Cooper, director of IWMC, said the firm had banked with Barclays for more than 20 years. 

A Barclays spokesperson said: “Due to client confidentiality, we are unable to discuss this matter with you but Barclays is complying with its legal and regulatory obligations.”  

Cooper started researching alternative banks but found excessive delays in responses as well as flat refusals to take on their business accounts. 

Cooper said: "After this, I went back to Barclays to express our dissatisfaction, as we appear to be in a situation where we cannot find alternative banking within the timescale. They have given us an extension to June 2021 to find and alternative.

"As you can imagine, we are currently in state of "limbo" not actually knowing what we can do and have our "fingers crossed" that TSB or NatWest will come to the rescue."

IWMC provided a breakdown of approaches it has made to several banks, which can be seen in the box-out below.

Barclays does provide banking services to FCA-regulated companies, such as advice firms, and to insurance companies. 

A spokesperson for HSBC said: "HSBC does support FCA regulated companies; new business account applications from IFAs are reviewed on a case by case basis to determine eligibility.”

Martin Strong, a mortgage specialist and financial adviser for Strong Mortgage Solutions, said he had tried to set up a limited company bank account, as he created a new business in July last year and was "growing under the current climate".

He told FTAdviser: "I was struggling to set up an account with Starling Bank a few weeks ago and one of my SIC codes was not accepted by them. 

"I asked them over the webchat if I took it off, would I have an issue - and they told me 'no'. This cost me £13 to update Companies House, which is not a problem, but after the application went through they came back and declined my case.