Eleanor Jones, WCVA’s Governance Manager shares the main findings of recent charity banking research conducted by the Charitable Finance Group.
Thank you to those of you who recently participating in the charity banking survey. The full report has now been published by the Charitable Finance Group and further work in this area will be carried out in response to the survey findings.
The full report is available here for you to read.
KEY STATISTICS
2,000 people shared their experiences of charity banking challenges. Charities with annual income from under £10,000 to over £100m took part.
The main challenges experienced were:
- Changing the mandate – 75% of respondents had experienced difficulties.
- Identification – 34% of respondents had to attend a branch in person, and many cited challenges in proving the identity of signatories or the organisation.
- Dual signatories or authorisation – over 500 respondents told us they did not have accounts with dual authorisation for transactions, despite this being recommended for managing risk and fraud prevention by charity regulators.
- Debanking – although having accounts frozen or closed had only affected 12% of respondents, this was a particular challenge for charities operating overseas. Fear of debanking was also a factor in the stress experienced by charity trustees, volunteers and staff.
- Communication – numerous experiences indicated poor communication, largely on the part of banks and financial institutions towards their charity customers.
KEY THEMES
The challenges fit into three themes broad themes: knowledge and understanding, communication, and a desire for less complexity.
RECOMMENDATIONS
For banks and financial institutions
- Improve knowledge and understanding of charitable organisations among staff, especially those in customer-facing roles in branches and contact or customer service centres.
- Create and maintain dedicated customer service teams to support queries about charity and community accounts, with the knowledge and information to respond appropriately.
- Ensure that contact details for the dedicated customer service team are shared with all customer facing staff and customers holding charity or community accounts, so that queries can be directed to the right people, first time.
- Work with compliance and systems teams to adapt forms and information on charity and community accounts to reflect the language those organisations use.
- Develop greater knowledge and understanding of charitable organisations’ structures and governance models as a part of knowing your client.
- Review the information provided to charity and community account customers on Know Your Client (KYC), Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) to help recipients understand why these measures apply to every banking customer.
- Review communications with charity and community account holders to ensure these meet the requirements of the Consumer Duty.
- Conduct a cost-benefit analysis on adapting automated systems to handle charity and community accounts.
- Charitable organisations should take steps to challenge their bank or financial institution when communication does not meet the requirements of the Consumer Duty, using the complaints procedure if necessary.
For regulators
- Continue to provide guidance and information for charity trustees and those with financial control over charitable organisations – as well as those managing finances – on the importance of using banking services effectively to support good governance, manage risk and protect against fraud.
- Continue to gather data on issues with banking that affect charities, sharing summary data with financial services regulators.
- Regulators for the financial sector should be alert to the challenges facing charitable organisations and take steps to require more effective communication by banks and financial institutions with this group of customers.
- The charity sector regulators and the financial sector regulators should work together to support good governance, risk management and fraud prevention.
GETTING SUPPORT
If you need any assistance on this topic, please don’t hesitate to contact Eleanor Jones, Governance Manager at WCVA – governance@wcva.cymru – or you can speak to your local CVC. We are here to help.