Here, we tell you what you can expect from this new guide and explore whether it is likely to transform your banking experience.

The Banking Guide is a digital resource that can be downloaded as a 17-page document, though this lacks the hyperlinks and other guidance only available online. It starts by providing advice on how to choose the right legal structure for the organisation. This is an important consideration for anyone setting up a new entity or changing legal structure. If this applies to you, I’d encourage you to also join our November webinar ‘What’s the best legal form for your charity or social business?'

The guide then helps voluntary organisations to identify their banking requirements, offering 7 questions to crystallise their needs. For example, you will be prompted to consider your organisation’s requirements for branch-based services, banking cash and cheques, online banking facilities and more.

You can then browse the offer from different banks based on your requirements to find a product that suits your organisation. The guide currently lists 13 different banking providers, including the high-street banks and brands specialising in the not-for-profit sector. The overview includes the key benefits of each bank’s offer such as free banking, dual authorisation facilities and online mandate changes.

The guide provides a checklist which aims to simplify opening a bank account by helping you prepare all the relevant information in advance. This includes the information typically required to verify the ID of account operators and trustees, and the appropriate governing document to verify your organisation. It also offers guidance on other commonly asked questions about the organisation and its people, beneficiaries, beneficial owners and authorised account users.

The remainder of the guide is intended to help with the maintenance of the account, covering areas such as changes to organisation personnel and contact details, changes to account usage and other recommendations. The guide concludes with a section on frequently asked questions and links to voluntary sector support organisations.

It depends. It is useful for charities and other voluntary organisations to understand and prepare for all the information requests that they may encounter as part of their banking journey. The guide also helpfully explains why banks ask questions that can seem excessive and irrelevant to those unfamiliar with Know Your Customer (KYC) procedures and why they play an important role in preventing fraud, corruption and money laundering.

However, the guidance places the onus for improved banking experiences with the voluntary sector. This is worrying. We know that often, banking problems arise from inadequate services from banks. In a joint letter to UK banks last autumn, the charity regulators urged banking providers to provide their employees with training on charity structures and governance and to simplify their account opening procedures for voluntary organisations.

Our April article ‘Charity banking obstacles reach crisis point’ mirrored concerns raised by the charity regulators. We highlighted issues often reported by ICAEW members, including:

• Reluctance of some high street banks to provide accounts to charities, particularly smaller and unincorporated ones
• Mainstream and non-specialist banks closing charities’ accounts, citing compliance risk as a significant concern
• Poor customer service due to the absence of personal relationship managers in high street banks. Queries left unresolved due to a lack of understanding about how charities work.
• Forms not designed for charities and which fail to include comment fields that would allow trustees the opportunity to explain why none of the given options apply
• Difficulties transferring money abroad for charities that operate internationally, particularly in areas of political unrest and conflict

Lourens Du Plessis, Managing Director of Church and Charity Professional Services at Stewardship and a member of the Charity Community’s Advisory Group, expressed some doubts about how impactful this new guide will be: “There are checklists on how to respond to KYC requests from bank – whereas in many cases, the issue is charities getting asked for irrelevant information, or being given mere days' notice to collate information from a large number of voluntary trustees.”

Du Plessis explains that if voluntary organisations fail to provide information that is not available for charities, or if they cannot respond to banks within the narrow time window stated, their accounts are often abruptly closed. He concludes that: “This guide will not address the root issues, which is that banks often do not understand charities or force processes suited to commercial organisations onto not-for-profits.”

While the Banking Guide does not address many of the root issues, it can help voluntary organisations to identify suitable banking products, find guidance related to accounts opening and maintenance and to better understand why the bank is asking certain questions. It is also encouraging that several banks contributed to the guide and have been engaging more with the charity sector to understand where their services need to improve. Time will tell if banking providers follow with improvements to their own services as demanded by the charity regulators.

More support:

• UK Finance’s Voluntary Organisation Banking Guide
• Guidance on charity banking from the Charity Commission