New data suggests nearly half of charities experience issues when banking

7 Mar 2024 01:22 PM

Latest survey from the Charity Commission reveals widespread scale and impact of ongoing banking issues facing the sector.

Yesterday (Thursday 7th March 2024), the Charity Commission shared early findings from its annual sector survey, revealing that 42% of trustees surveyed said their charity experienced poor service from their banks in the last 12 months.

6% of respondents confirmed that they had experienced account freezes or being blocked out over the past year and 7% of respondents reported that their bank had lost their records.

Other findings from the survey include:

• 32% of respondents faced issues when trying to update their charity’s contact details or signatories
• 18% had difficulty trying to open a new bank account
• 15% found it challenging to comply with identity requirements set by their bank
• 14% found it difficult to understand what their bank requires of them

These figures include charities experiencing more than one issue.

This comes as the Charity Commission renews its calls for urgent action to be taken by the UK banking sector to improve the service it offers to charities.

The regulator says inadequate banking services result in three key concerns:

• Risks to the provision of charitable services, resulting from charities being unable to meet financial obligations, such as paying staff
• Unsafe banking and financial practices, for example the use of trustees’ personal bank accounts to meet financial obligations, a direct contravention of the Commission’s guidance
• Longer-term impact on morale of volunteer trustees – anecdotal evidence demonstrates some trustees have resigned over frustrations around disruptive banking services.

Helen Stephenson, Chief Executive of the Charity Commission said:

I’m shocked, but not surprised by these new figures, which offer undeniable evidence of the extent and impact of the appalling service charities receive from some banks.

It is simply not good enough that volunteer trustees, who are giving of their free time to serve society, are faced with such unnecessary challenges in managing their charities’ money.

We have worked behind the scenes with banks to improve the service they provide to charities. So far, I have been disappointed with their response. I hope this new research sends a message to the CEOs of high street banks that change is needed now.

In November 2023, the Charity Commission, alongside sister regulators in Northern Ireland and Scotland, issued an open letter to all UK high street banks, highlighting the “substandard” service charities receive. The letter warned how “inadequate banking provision drives charities to rely on unsafe practices” and set out key improvements the regulators want to see. This includes, making processes simpler and improving staff training on how charities operate.

The latest data released by the regulator are early extracts of the survey’s findings. It will be published in full later in the spring.

Notes to editor:

• The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its purpose is to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.
• The survey was based on a sample of charity trustees from the Charity Commission’s online Register of Charities. It was commissioned by the regulator and carried out by research partner BMG. A total of 2,541 responses were received via an online survey between 2nd and 12th February 2024
• Examples of impacts on charities:
  • a charity experienced major disruption when their bank froze their account with little notice after asking for scanned identification from more than 60 trustees, many of whom were elderly with no access to internet banking.
  • a charity’s account was frozen after a bed bound trustee with cancer was unable to sign a document, despite having the signatures of dozens of other trustees
  • a charity’s bank account was closed suddenly, while its CEO was overseas delivering aid. This held up a major grant which will enable the charity to expand its work supporting women’s mental health in a deprived community.
• Specific case studies are available upon request.