Banking challenges for charities
Charities continue to be confronted with excessive challenges when it comes to meeting their banking needs.
Initial findings from a Charity Commission survey (published March 2024) found that 42% of 2,500 charities have encountered obstacles with their banking in the last 12 months.
Difficulties highlighted by the survey included
- 32% of respondents faced issues when trying to update their charity’s contact details or signatories;
- 18% had problems trying to open a new bank account;
- 15% found it challenging to comply with identity requirements set by their bank; and
- 14% found it hard to understand what their bank requires of them.
Inadequacies in the service provided by banks included
- Complexities when it comes to opening accounts;
- Hesitancy in offering accounts with suitable internal controls;
- Accounts frozen or closed without warning;
- High charges; and
- Long delays in implementing new mandates.
Call for banks to address shortcomings
The Charity Commission is urging the banking sector to ramp up the service it offers to charities, putting initiatives in place to better support trustees in managing their charity’s money.
The issues caused by the failings of the banking sector are having significant repercussions on the provision of charitable services. Poor service levels mean some charities are no longer able to fulfil their financial obligations; there is also a wider impact on confidence amongst volunteer trustees, as their role becomes one of frustration at not being able to effectively carry out their commercial responsibilities.
There is pressure on the banks to fundamentally improve the service they offer and in doing so recognise the sector as one with very specific and unique needs. The Charity Commission has issued an open letter to all UK high street banks, highlighting the ‘substandard’ service charities receive. ICAEW has also been prompted to raise the difficulties reported by members with the charity regulators, UK Finance and the Financial Conduct Authority.