Many charities are facing continued struggles with their bankers, becoming a serious issue for the volunteer-led sector as a whole, both in terms of time and support loss and governance risks; indeed, as covered in our December 2023 eNews, the CEO’s of the UK’s three charity regulators had previously written an open letter to UK’s main high street banks requesting urgent action to help hard-pressed charities.
The Charity Commission continues to review this matter, and has recently issued new Charity banking guidance to assist charities in opening a bank account, updating bank details, moving money abroad, and raising complaints about their bankers.
Opening a bank account can be surprisingly difficult for charities as they are often required to provide an excessive number of documents. The Charity register can be used to assist in the process of verifying publicly available information regarding the charity, and Trustees shouldn’t be afraid to direct banks to it. Trustees should also speak to their bank if requests for information are unclear or not applicable for the legal structure of the charity; needless to say, having a firm grasp on said legal structure should help the process.
Not maintaining accurate bank details can lead to issues and delays including administrative difficulties due to being unable to gain access and, in the worst case, suspension of accounts. It is therefore important that charities continue to update their bank details on an ongoing basis, such as every time there are new Trustees or new senior team members who will be authorised signatories at the bank. Important updates to make also include changes to contact details such as email and address. It also is not unusual for some charities to receive large one-off grants or donations from various sources; to avoid suspicious activity triggers it is advised to inform the bank of any known large or unusual transaction in advance, including those from overseas. For added comfort, charities can consider sharing due diligence processes. There is separate guidance on considerations that should be made by charities when moving money abroad.
When issues are not resolved, it is important for charities to use the complaints procedure at the bank and follow the bank’s relevant processes, but charities can also consider escalating matters with the financial ombudsman if deemed necessary. Furthermore, charities can also take complaints about their banks to the Financial Conduct Authority (FCA), with which the Commission continue to engage in seeking to make banking for charities easier.
