Banking

ABOUT

Over the last few years, several local (parish and town) councils have communicated their frustration to NALC and county associations that high street and other banks do not understand what they are, how they work or what sector they fit into.

Local councils must, however, be able to discharge their statutory financial duties under the Local Government Act, 1972, the relevant Audit and Accounts regulations, and other statutory regulations, and be able to bank to make and receive payments. Due to a raft of different factors for many local councils, this has not been possible in recent years, making the task of the clerk, Responsible Financial Officer (RFO), chair and other councillors almost impossible in some instances.

NALC and county associations have continuously lobbied UK Finance (the trade association for banks), relevant government departments and the Know Your Customer (KYC) teams of various high street banks to highlight these issues, with mixed results.

ISSUES AND CAUSES

In 2020, Oxfordshire, Nottinghamshire and Lincolnshire county associations completed their surveys of local councils in their areas to gauge what banking issues these councils were experiencing. In many instances, these issues were the same nationally. For example, inability to complete mandate drawdowns for bank accounts, change of signatory problems, repeatedly being threatened with account closure, councillors being asked to go en masse to bank branches 50 miles away to open accounts, and more recently, clerks being asked to produce financial evidence to confirm that their councillors were not or had not been bankrupt.

Possible causes for these issues have been many and varied – including the transition to online banking, the onset of post-Brexit money laundering regulations, the closure of bank branches, the miscategorisation of local councils as clubs or charities by banks, and the off-shoring by banks of their call centres to Asia or the USA.

RECENT LOBBYING

NALC met with UK Finance in 2020 and highlighted various banking issues which had been communicated to it by county associations of local councils during and since the COVID-19 lockdowns. This was followed by a further roundtable with high street banks, UK Finance, county associations of local councils and certain high street banks in summer 2021. Since then, further joint engagement has occurred between NALC and Action for Communities in Rural England (ACRE) on banking problems in rural areas. Further recent engagement between NALC and UK Finance has positively resulted in the production of a guidance note for high street banks in terms of how to best categorise local councils as customers, how local councils function and the various functioning roles of local councils.

BARCLAYS

NALC engaged with the Barclays Know Your Customer team in March and September 2023. These positive calls resulted in Barclays changing the customer categorization of local councils across all of its teams and the below helpful direct contact data being supplied by Barclays for local councils:

Mandate Team (Open Monday to Friday between 08.30 and 18.00 on 0333 202 7477)
Digital learning on banking
Everyday banking servicing/support team (0345 605 2345)

UNITY TRUST BANK

Following a recent meeting between the Northamptonshire County Association of Local Councils and Unity Trust Bank (UTB) in the summer of 2023, it has been agreed that UTB can work with and engage with county associations to provide updates on relevant contact data for certain local councils as needed in the same way that the external auditors work with them. For example, if UTB sends an email to a local council, then a chaser, and has not received any reply, they could reach out to the relevant county association for any intelligence on why there is a lack of response. The county association may know about a change of clerk, a change of email, or any other extenuating circumstances that might help UTB, but most of all, it will help the local council.

RESOURCES

BANKING