Reduced capacity and tighter restrictions in the financial sector have created a “banking blackout” that has left many small charities locked out of their accounts or unable to open a new one, the organizations said. Third sector.
Charity groups and membership organizations have expressed concerns that smaller organizations that may have been inactive during the lockout but later returned to fundraising have found their accounts closed or frozen due to the alleged inactivity.
Others reported that they were unable to apply for new accounts due to the fact that almost none of the large banking providers accepted new applications, the charities said.
This has led to many not being able to pay in grants or to people using their personal accounts to accept donations, organizations said. Third sector.
Sue Spiller, managing director of Sobus, a community development agency for Hammersmith & Fulham in west London, said the only accredited lender she could find she was accepting applications told her she was ineligible. because the organization could not appoint a person with significant control.
“We should rewrite our constitution,” Spiller said.
He said his organization had acted as a bank for some of its members because their accounts had been closed or on behalf of new groups that arose in the community as a result of the pandemic.
Jane Arkley-Crouch, good neighbor’s network development manager at Community Action Suffolk, said many new groups joined her network during the pandemic.
“Due to the banking blackout, we have found that many of these groups have not been able to find a bank to open new accounts, or have fallen into the cracks and found themselves ineligible for new accounts,” he said.
Olivia Barker, chief executive of the Small International Development Charities Network, said many of its members have encountered this problem.
“Most of the newly registered charities are struggling to open bank accounts right now,” he said.
Several international currency trading brokers have also blocked accounts for sending funds overseas, he said, meaning it has been a tough time especially for small international development charities.
Rita Chadha, chief executive of the Small Charities Coalition, said her organization has been in contact with the Charity Commission and the government to see what could be done to help.
“We have at least two or three helpdesk questions a week about people having trouble opening a bank account.
“We are contacting all the big High Street banks and asking them for a meeting and we are waiting to call it in December,” he said.
He said the SCC hopes to hold a panel discussion next month and encouraged anyone interested to participate to contact him directly.
UK Finance is the collective voice of the banking and financial sector and represents more than 250 companies.
A statement stated: “The banking and finance industry is working hard to support customers in these difficult times, including providing an unprecedented level of support through government-backed loan schemes.
“All banks want to provide the best possible service to their customers and the decision to temporarily close or block an account would be made based on the specific circumstances of the case.
“We appreciate how important it is for third sector organizations to have access to banking services and invite these customers to contact their provider as soon as possible in the event of an unexpected account closure.”
A spokesperson for the Financial Ombudsman Service said: “If a charity believes it has been unfairly treated by its bank, it should first file a complaint with the bank.
“If the charity isn’t happy with the response, they can file a complaint with us and we’ll see if we can help.”
The FOS guide on how to file a complaint can be found here.