Ministers have warned banks to learn from the mistakes of NatWest, following the resignation of chief executive Dame Alison Rose.
Ministers have urged banks to learn from the mistakes of NatWest in the wake of chief executive Dame Alison Rose’s resignation in a row over the closure of Nigel Farage’s Coutts account.
The former Ukip leader demanded a wider shake-up of the NatWest board and a “cultural change” within the industry at large after his campaign resulted in the departure of NatWest’s top banker.
NatWest Group chairman Sir Howard Davies said early on Wednesday that Dame Alison would be stepping down, after both Downing Street and the Treasury expressed their “serious concerns” about her conduct.
Dame Alison had admitted a “serious error of judgment” by discussing with a BBC journalist Mr Farage’s relationship with Coutts, owned by NatWest Group.
Mr Farage had been crusading against the private bank for shutting down his account – a decision taken in part over his political beliefs.
Sir Howard had initially said the board members had decided the chief executive retained their “full confidence”, but that position rapidly changed following the Government intervention.
Ministers were quick to welcome the departure of Dame Alison, with calls for the financial sector to take heed of the lessons of the Farage row.
A No 10 source said that she had done the “right thing in resigning” and that Rishi Sunak had been “concerned about the unfolding situation”.
It came as shares in the lending giant fell by 3% in the wake of Dame Alison’s resignation, with other banks also seeing their shares hit.
City minister Andrew Griffith said it was “right” that Dame Alison has stepped down and hoped “the whole financial sector learns from this incident”.
Dame Alison, a member of the Prime Minister’s business council, had been expected to join other banking bosses at a virtual meeting with Mr Griffith on Wednesday morning to discuss concerns related to customers’ “lawful freedom of expression”.
He said: “This would never have happened if NatWest had not taken it upon itself to withdraw a bank account due to someone’s lawful political views. That was and is always unacceptable.
“Its role is to serve customers well and fairly – not to tell them how or what to think.”
Energy Secretary Grant Shapps also welcomed the decision and urged banks against using the politically exposed person (PEP) risk tests, which Mr Farage blamed for his account closure.
“However, it’s equally important banks stop applying political (PEP) tests to people (and families) opening new bank accounts too,” he added.
One junior minister also said that his family had difficulty accessing financial services in the past.
Policing minister Chris Philp said a lot of MPs or their families have been turned down by banking services because of “politically exposed persons” rules, which cover anyone considered to be higher risk because of their political connection.
“The rules are set up for the right reasons but MPs quite often get caught by these PEP rules because they’re applied kind of overzealously,” he told Sky News.
“It is not spoken about much but if you look at almost any MP they will have had an experience like this, I think the Nigel Farage case is an extreme one, but I’m afraid it’s not unique.”
Dame Alison’s resignation as chief executive came after an emergency board meeting was called late on Tuesday night to determine her future.
It followed days of criticism and questions for the NatWest Group, after Mr Farage presented evidence that his account at Coutts had been closed partly due to his political views conflicting with the bank’s values.
The evidence obtained from the bank through a data request contradicted a BBC News story, which initially claimed the account closure was motivated by commercial reasons only, citing Mr Farage’s failure to meet a £1 million borrowing requirement.
Dame Alison admitted discussing Mr Farage’s relationship with Coutts in a conversation with the BBC’s reporter behind the story, business editor Simon Jack.
She conceded that she confirmed the former Ukip leader was a Coutts customer, thinking it was public knowledge, and that he had been offered a NatWest account.
The boss insisted she “did not reveal any personal financial information about Mr Farage”, but admitted having left Mr Jack with the “impression that the decision to close Mr Farage’s accounts was solely a commercial one”.
Mr Farage responded by saying that the exit of Dame Alison was only “a start” and that changes need to go further.
He told the PA news agency on Wednesday: “Anybody on that board that backed that statement that was put out at 17.42 yesterday – a totally unsustainable and untrue statement – anybody that backed that behaviour should be gone.
“I think this culture runs deep through the entire banking industry. I think there is a massive anti-Brexit prejudice and I think the whole thing needs to change.
“The entire industry needs to wake up to the absolutely appalling way it has been treating people all over the country.
“We bailed these people out and in return they close our branches, they close our personal and business accounts on a huge scale. We need real change here and I am going to go on pushing for it.”
But some senior Labour figures questioned the approach taken by the Government over the row.
Shadow secretary of state for international trade Nick Thomas-Symonds told Sky News: “It’s astonishing isn’t it to see last night the Chancellor of the Exchequer and the Prime Minister under pressure from outside weighing in so quickly against a business leader like Dame Alison Rose.
“If only the Government would hold itself to the same standards of speed I’m sure we’d been in a much better position generally.”