Charity Banking Problems and Resources

According to the Charity Commission’s annual sector survey, 42% of trustees surveyed reported that their charity had experienced poor service from their bank in the last year. Issues included:

• account freezing;
• lost records;
• misunderstanding charity governance models or income flows; and
• cumbersome procedures on updating contact details and signatories.

This is more than just inconvenient – charities without banking facilities cannot pay their staff or their rent. It is simply unacceptable that charities, working at the coalface of society’s most pressing issues, for no profit, should receive a service that is so appalling.

In 2023 an open letter to the banking sector by the UK’s three charity regulators explained the issues and set out key improvements.

At the end of July the Charity Commission issued guidance advising charities of the importance of having a bank account. In addition, the guidance offers advice about avoiding common issues, keeping details up to date, warning in advance of unusual transactions and sharing due diligence processes with the bank if appropriate. They recommend complaining first to the bank, and then to the Financial Conduct Authority and the Financial Ombudsman.

Another useful resource is the UK Finance Voluntary Organisations Banking Guide which has an  account finder tool and FAQs. They recommend updating the bank annually when you file the annual accounts and reports as well as proactively notifying the bank of changes. It explains how abnormal activity triggers investigations and freezing of the account – and highlights the importance of advance notice of large deposits, withdrawals and transfers overseas.

We hope these tools will make life easier for charities and avoid paralysing situations.