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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

UK regulators join to demand better service from banks

This news post is 7 months old

Charities are treated differently from private and business customers

OSCR has joined with the Charity Commission and the Northern Ireland regulator to condemn high street banks for poor lending practices to charities.

The watchdogs say charities’ accounts have been abruptly closed or suspended often for no discernible reason.

In a letter to all major UK banks, the regulators ask that the process for setting up a charity bank account be made more straightforward and that staff should be better trained in understanding the needs and operations of charities.  

The letter said: “Charity trustees are obliged by law to account for the money they raise and the funds they distribute.

“Adequate banking provisions and control over cashflow are critical to robust financial governance procedures, and that underpins the sustainability of the sector.

“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.

“Those impacted most tend to be smaller local organisations. These issues are of concern to us as charity regulators and should be of concern to banks.

“There is little more that we as regulators can do. The action needed can only happen with support and leadership from UK banks. 

“Working with charities is key to acting as a responsible business within our society, and the best way that banks can do so is by streamlining services to help charities operate in a way that does not create serious governance issues for them.”

OSCR chief executive Maureen Mallon said: “As regulators, we are concerned about the issues some charities face in their banking relationships. The difficulties encountered hinder the invaluable work charities do.

“It is imperative that banks take our recommendations forward to streamline processes, educate staff, and ensure an environment that enables charities to focus making a positive impact in society.

“The support of these banks is vital, and their most effective contribution lies in simplifying services to assist charities in operating without encountering the challenges that currently exist.”