Charities are facing increasing difficulties with access to adequate banking services. As a result, charity infrastructure organisations and ICAEW have raised the difficulties reported by their members to the charity regulators, UK Finance and the Financial Conduct Authority to affect a change to the increasingly challenging situation.

In November 2023, the chief executives of the charity regulators in England and Wales, Scotland and Northern Ireland wrote a joint letter to highlight these difficulties and explained the impact this has on charities and the people or causes they serve. They asked the banks to streamline their services so that charities can operate in a way that does not create serious governance issues for them.

At ICAEW, we hear regularly from you that charities, particularly smaller and unincorporated ones, are facing a myriad of obstacles with their banking needs. These include the reluctance of high street banks to offer accounts with appropriate internal controls, freezing of accounts due to identification issues, inadequate customer service, high charges and lengthy delays in implementing new mandates. For example, we heard from you that:

• Some high street banks are increasingly reluctant to provide accounts to charities, particularly smaller and unincorporated ones which makes it challenging for new charities to operate effectively
• In some cases, when accounts are offered, they lack the necessary internal controls recommended by the Charity Commission, such as dual payment authorisation
• Mainstream and non-specialist banks have been known to close accounts for charities, citing compliance risk as a significant concern
• Banks frequently request signatures from all trustees, even when some trustees no longer serve on the board, causing delays in accessing banking services, especially when banks freeze accounts
• The absence of personal relationship managers in high street banks has led to poor customer service for charities. Queries often go unresolved through automated services because customer service teams lack an understanding of how charities work. This forces charities to resort to raising formal complaints to get issues addressed.
• Forms used by banks are not designed for charities and fail to include comment fields that would allow trustees the opportunity to explain why none of the given options apply
• Small charities are grappling with both standing and transaction-based charges which can be disproportionate to the volume of transactions and income levels of charities, diverting resources away from their core missions
• Charities that operate internationally, particularly in areas of political unrest and conflict, face additional difficulties transferring money abroad

As a result, time is wasted by charity staff and volunteers, often the treasurer, trying to deal with these banking issues. The cost of this is borne by the charity’s beneficiaries as valuable staff or volunteer time is wasted.

Furthermore, charities that struggle to open accounts may hold excessive amounts of cash in one bank account which prevents them from earning interest on their reserves and renders them more vulnerable to banking failures. In addition, the financial risk increases when bank mandates are not updated in a timely manner or when bank accounts lack adequate controls such as dual payment authorisation.

I wish I had a magic wand to remove all banking obstacles for charities. But, while I’m not a magician, please be assured that I will keep sharing your experiences, amplifying your voice in conversations with banks and with UK Finance, the Financial Conduct Authority and the Charity Commission. These concerns are also shared internally within the Institute so that we can report such challenges within a broader context (charities are not alone in experiencing banking challenges).

Some of our regional offices bring together charity finance professionals and volunteers in regular charity insight groups where these challenges are frequently discussed. Often, examples of better banking services are shared in these meetings too. Sometimes we also invite banking representatives to join and explain their charity products and to answer questions. We hope that by connecting you directly to banks in this way, or by inviting banks to speak at events or webinars, you can find a bank that welcomes charity clients and that can meet your needs.

If this is of interest, you may want to sign up for our upcoming webinar with Allica Bank and join our virtual Charity Conference on 18 and 19 January.

If you would like to share your charity’s banking experiences with me, please get in touch.