By using this website, you agree to our use of cookies to enhance your experience.
Graham Awards


New Banking Scandal as thousands of agency accounts are closed

A Parliamentary committee has heard that thousands of small and medium-sized letting agencies were debanked in 2023, with financial institutions forcibly closing accounts.

Lloyds closed 1,130 accounts, Santander 320, and Metro Bank some 10 per cent of its network.

Banks cited regulatory compliance, concerns over financial crime, and failure to furnish requested information as their primary reasons for closing accounts.


Many lettings agencies will be familiar with related problems, mostly over pooled client accounts.

Many such accounts have been closed - or deterred from even being opened - because banks claim they contravene anti-money laundering rules introduced and tightened in recent years. Many letting agents have suggested that banks have discretion to reduce the scale of AML vetting in such a way as to allow pooled accounts, but several banks have contradicted this.

Tory MP Harriett Baldwin - chair of the all-party House of Commons Treasury Committee - has now written to major banks’ chief executives, asking for the specific number of SME business accounts held by their organisations, and if possible, a break-down by business sector; the number of accounts closed at the instigation of their organisation for the year to date, and the proportion of those that were SME business accounts; and the reason for the closure of the accounts.

In the UK, letting agencies are required to hold rent money in a client account, where the money is protected. Without a valid client account operated by an FCA-regulated bank or business society, a letting agency cannot legally operate or take out a client money protection policy, which is a legal requirement in England, Scotland and Wales.

The issue has long been championed by PropTech entrepreneur Neil Cobbold, of automated payment service PayProp, who says: “A stable banking relationship is fundamental for letting agencies and their tenants and landlords. The risk of not being able to receive or pay out rents due to account closures is a real worry for agents across the country, and one we are pleased to see the government investigating. It’s especially important to protect the SME business who are the ones most at risk of being debanked.

“Legitimate agents should not have to worry that their bank account will be closed. While some in the industry are calling for agents to be regulated (it may help prove to banks that they have effective financial controls and client money handling policies in place), putting a regulator in place will take time and will not solve the immediate problem some agencies are facing today.”

  • icon

    Lloyds de-banked us because we were not AML registered despite having CMP and Deposit monies held by DPS in the custodian scheme. We also had an email confirming that we did not have to register for AML and that even if we did, they would not supervise us, just take the annual fee!

    Now happily with Virgin Money.

  • icon
    • S S
    • 11 March 2024 13:46 PM

    LLoyds refused a new undesignated client account as apparently our policies weren't strong enough.
    Regulated by RICS, membership of ANEA, ARLA, TPO and registered for AML since 2014.
    Robust AML policy - incorporates everything that Government advise, could not do more! Third party digital AML provider (so not based on subjective in house) - and lettings don actually require AML as no single property rented at £8000 per month.
    Been banking with LLoyds for 50 years!
    Their verdict - Policy is not strong enough but we can't tell you what is not strong enough as that would influencing your internal policies. Reapply within 30 days!
    Our Relationship Banker was horrified and embarrassed - as I said so much for your advertising - "We'll be by your side", so much for loyalty - 50 years of banking - NOT ONE SINGLE ISSUE EVER!
    All counts for nothing - Perhaps I'll look into Virgin Money.,....


Please login to comment

MovePal MovePal MovePal
sign up