Around half a million "innocent consumers" were debanked last year, according to new statistics.
The data is the highest it has been for a decade, with around 408,000 bank accounts were closed over the course of 2024.
Between 2016 and 2017, only 45,091 accounts were shut down, according to data revealed by the Financial Conduct Authority (FCA).
In every scenario, lenders said "financial crime reasons" were behind their decision to shut the accounts off, according to The Telegraph.
Last October, the Government tightened up fraud reimbursement rules, making authorising and receiving banks now both liable for losses up to £85,000.
The concerning rise has come after Reform leader Nigel Farage was debanked by Coutts in 2023 as private documents suggested that the politician was deemed a "reputational risk".
The Clacton MP said: "These numbers are appalling. The last Government promised me there would be changes but nothing happened."
Farage added: "The FCA do not protect innocent customers who are debanked either."
LATEST DEVELOPMENTS:
The GB News presenter said he had been debanked for "ideological" reasons.
Rules to combat money laundering were tightened up in 2017, encouraging banks to assess customer activity and verify individual’s identities.
The Institute of Economic Affairs (IEA) think tank’s Kristian Niemietz said: "Banks already spend billions on anti-money laundering activities, and investigating every suspected case would be prohibitively expensive.
"So, the economically rational thing to do from their perspective, is to close an account upon the slightest suspicion.
"The majority of them are probably innocent people, who just engage in some financial practice that a money launderer might also engage in, such as frequent and irregular cash deposits, or overseas transactions."
The National Crime Agency has estimated that an eye-watering £10billion is laundered via the British banking system each year.
Under such rules, banks who suspect their customers are involved in criminal activity cannot inform them of the reason behind their account closure - leading to surmountable levels of frustration among fraud victims.
An FCA spokesman said: "Firms have a responsibility to do proper financial crime checks and ensure they have appropriate measures in place to prevent criminal activity.
"Where firms have grounds to close an account, we expect them to communicate as openly as they can."
Find Out More...
The data is the highest it has been for a decade, with around 408,000 bank accounts were closed over the course of 2024.
Between 2016 and 2017, only 45,091 accounts were shut down, according to data revealed by the Financial Conduct Authority (FCA).
In every scenario, lenders said "financial crime reasons" were behind their decision to shut the accounts off, according to The Telegraph.
Last October, the Government tightened up fraud reimbursement rules, making authorising and receiving banks now both liable for losses up to £85,000.
The concerning rise has come after Reform leader Nigel Farage was debanked by Coutts in 2023 as private documents suggested that the politician was deemed a "reputational risk".
The Clacton MP said: "These numbers are appalling. The last Government promised me there would be changes but nothing happened."
Farage added: "The FCA do not protect innocent customers who are debanked either."
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The GB News presenter said he had been debanked for "ideological" reasons.
Rules to combat money laundering were tightened up in 2017, encouraging banks to assess customer activity and verify individual’s identities.
The Institute of Economic Affairs (IEA) think tank’s Kristian Niemietz said: "Banks already spend billions on anti-money laundering activities, and investigating every suspected case would be prohibitively expensive.
"So, the economically rational thing to do from their perspective, is to close an account upon the slightest suspicion.
"The majority of them are probably innocent people, who just engage in some financial practice that a money launderer might also engage in, such as frequent and irregular cash deposits, or overseas transactions."
The National Crime Agency has estimated that an eye-watering £10billion is laundered via the British banking system each year.
Under such rules, banks who suspect their customers are involved in criminal activity cannot inform them of the reason behind their account closure - leading to surmountable levels of frustration among fraud victims.
An FCA spokesman said: "Firms have a responsibility to do proper financial crime checks and ensure they have appropriate measures in place to prevent criminal activity.
"Where firms have grounds to close an account, we expect them to communicate as openly as they can."
Find Out More...