At some stage over the past 30 or so years, bank accounts seem to have assumed the characteristics of a basic need rather than a nice-to-have. At least, that is, for those with a bit of money, a job, a pension or, better still, a business.
Back in the early 1970s, the Irish banks went on strike for six months. Life continued, for individuals and businesses, almost uninterrupted. In many instances pubs became clearing houses, exchanging cheques for cash, thus ensuring that their customers had access to liquidity.
It’s impossible to imagine the same happening in the 21st century.
In the old days — 30-plus years ago — it did seem that all you needed to get and keep a bank account was money. Nobody seemed terribly bothered about where it came from or went to. Certainly, nobody seemed bothered about the person behind the account.
That has all changed. Nowadays, unless you’ve managed to burrow your way into a cryptocurrency world, a bank account is a necessity. And money is only part of what’s needed to get and keep one. As banking became an everyday necessity, the regulators piled in to minimise all the nefarious stuff that happens when money is able to move easily around the globe. Now there are probably as many regulators overseeing the banking system as bank employees running it.
As previously mentioned on these pages, a friend recently had his bank account frozen because he was unable to provide the screeds of information needed to satisfy his hyper-vigilant bank.
Unlike the Sekunjalo Group, my friend didn’t have the funds to employ the lawyers to release the bank’s frozen grip. But, also unlike Sekunjalo, he did find shelter at another bank.
As anyone who tracks the UK news will realise, having bank challenges is not an exclusively South African problem. Former member of the European parliament and lead Brexiteer Nigel Farage’s posh bank Coutts recently dumped him.
Whether you think Coutts was right depends largely on your position on Brexit, given that Farage is deemed to have played a determining role in the UK’s exit from the EU. Many say Coutts was entitled to dump Farage as soon as the value of his account had dropped below some predetermined level.
And just as many say it was a stitch-up; Coutts wanted to be shot of Farage because of his political leanings. That is a troubling thought when it involves the provision of what has become an essential service.
Now there are probably as many regulators overseeing the banking system as bank employees running it
Farage was, understandably, unhappy and used a “subject access request” to get hold of the bank’s dossier on him to determine the reason behind the move.
The 40-page dossier, which Farage promptly released to the media, makes for fascinating reading. “There were reputational risks to consider of banking NF [Nigel Farage] given he was such a high-profile figure and had been the subject of significant adverse press,” said the minutes from the wealth reputational risk committee meeting of November 17 2022.
The dossier made reference to Farage knowing a few Russians, but acknowledged that there was nothing substantive in that. It also said that despite the adverse press, “from a legal perspective NF has not been formally charged [with] any wrongdoing and is not subject to any regulatory censure”. The plan was to “exit” Farage on commercial grounds when the mortgage rolls off. “This was not a political decision but one centred [on] inclusivity and purpose,” reveal the minutes, without a hint of irony.
The dossier contains absolutely no indication of troubling transactions; nothing that might give rise to regulatory worries. It was all about politics.
As with Farage, no-one in the Sekunjalo Group has been formally charged with any wrongdoing or is subject to any regulatory censure. Given the secrecy that surrounds banking it’s impossible to know precisely what was behind the decision by eight banks to terminate their services to the group, but among the screeds of legal documents there are references to the sort of things that tend to make regulators a little nervous.
But all those references could be presenting a misleading picture, one that is unfair to the Sekunjalo Group. Perhaps it is time for it to use a “subject access request” to find out precisely why the banks don’t want to deal with it. And if there is any evidence of political or racial bias, that should be shared with the South African public.
It’s also time for the regulators to play a more active role instead of leaving important decisions to the apparent whims of bankers.
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