NatWest’s mishandling of the Farage farrago

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There is a certain irony to the fact that Coutts, known as bankers to the elite, worried about the reputational risk of keeping Nigel Farage as a customer. Its decision to drop the outspoken Brexiter has resulted in far bigger damage to the reputation of the bank and its parent, NatWest. It is a cautionary tale of the difficulties for businesses everywhere of navigating contemporary “culture wars”. At all points, however, NatWest’s and Coutts’ handling of the affair has fallen short of what might be expected from one of Britain’s best-known businesses. The resignation of the group chief executive, Dame Alison Rose, was unavoidable.

The original decision by Coutts to “debank” the onetime UK Independence party leader, and the process that led to it, was misguided. The 40-page Coutts dossier on Farage that he later obtained resembles a copy-and-paste job from a Google search. It noted that the bank had commercial grounds, under its eligibility criteria, to drop Farage once he paid off a mortgage this year. But it concluded that continuing to offer banking services was not “compatible with Coutts”, given views he had expressed that were “at odds with our position as an inclusive organisation”.

NatWest’s Rose has been accused of then breaching client confidentiality by suggesting, anonymously, to certain journalists that Coutts’s move was a purely commercial decision. On Tuesday she admitted to a “serious error of judgment” in discussing Farage’s relations with the bank, but denied revealing any personal financial information. Farage himself had put the affair in the public domain through his video complaining of the loss of his account, even if he did not initially name Coutts. Yet the NatWest boss has said she was not in full possession of the facts. This appears not to have been a deliberate cover-up, but it compounds Rose’s mistake.

The NatWest board initially suggested this was not a sufficient misjudgment for a chief executive with an otherwise solid record to lose her job, though it might affect her pay. Its hand had to be embarrassingly forced by ministers. While the government should not normally interfere in a bank’s leadership, the taxpayer’s 39 per cent stake, after the £45.8bn bailout of what was then RBS in the 2008 financial crisis, means it is bound to have a louder voice than other shareholders.

The broader lessons are clear. Lawfully held political opinions should not be a bar to a bank account. This is true of any individual, and other troubling cases have come to light since the Farage story broke. Rose attracted the ire of “antiwoke” campaigners through her — often admirable — embrace of purpose-led banking, but the inclusivity NatWest and Coutts proclaimed must mean tolerance of diverse views, provided these do not shade into illegality.

A spotlight has also been shone on the difficulties faced by many so-called politically exposed persons in gaining banking services. Rules need to be clarified. Banks’ assessment of PEPs’ eligibility should be devoted to the possibility of corruption or money laundering, not scrutiny of political views except in rare cases. Those who choose to go into politics or public service should not be penalised by having trouble accessing what is considered a basic right.

Referring to the “many thousands of innocent people” unfairly shut out of banking, Farage has said he will “do my best to be their voice”. This could be a worthy outlet for his campaigning provided it does not morph into a divisive, culture-wars crusade. Today’s imbroglio has blown a hole in the leadership of one of the UK’s top banks, but if it ensures such episodes do not recur, and helps to broaden access for the “unbanked”, it might yet have some positive effects.