Charities are seeing their bank accounts suddenly closed or suspended by high street banks, the UK’s three charity regulators have warned.
In an open letter to the CEOs of major banks, the regulators have said the third sector experiences “poor customer service and administrative delays” and called on banks to improve the “substandard” services they offer.
Some charities are unable to pay staff while others have experienced disruption to their operations as a result of the sudden account freezes.
One charity experienced major disruption when its bank froze its account at short notice after asking for scanned identification from more than 60 trustees, many of whom were elderly with no access to internet banking.
Another charity had its account frozen after a bedbound trustee with cancer was unable to sign a document, despite having the signatures of dozens of other trustees.
The regulators have urged banks to make it easier for trustees to set up a charity bank account and better train bank staff on how charities are run.
The letter warns: “Inadequate banking provision drives charities to rely on unsafe practices, such as trustees using their own bank accounts, or keeping large cash reserves unsecured – and public trust in charities may become eroded.”
It also outlines other challenges facing charities including the reduction of bespoke banking services, poor customer service and unsuitable online banking services.
Charity Commission CEO Helen Stephenson told its annual public meeting in Liverpool on Tuesday: “Charities are on the front line of the current cost-of-living crisis, providing vital support to people across the country at this challenging time. Many are themselves facing financial difficulties.
“The current stresses for charity trustees are heightened by avoidable frustrations at the availability of bank accounts and substandard service from banks.
“Too often, charities experience accounts being closed or suspended suddenly for long periods of time with poor customer service and administrative delays.
“This letter makes clear that we consider the service charities experience is unacceptable.
“The scale of the response from banks needs to improve, now, and at pace.”