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All the Fault of the Banks?

4th February 2014

I am forever being told by my clients, when they are trying to open a business or company account, that their bank has insisted on some ludicrous, or indeed impossible, requirement that they must meet before the account can be opened.  Please let me give you a couple of examples from the many I have witnessed...

One client (trying to open a new account for a company that hadn't been used for a number of years) told me that the bank had insisted that they couldn't open an account until the company "...had changed its status from dormant to active".  This is, of course, complete nonsense.  "Dormant" status is a consequence of past events.  A company is dormant if it has no transactions, and, if it is dormant for a whole accounting year, it can take advantage of all sorts of exemptions when filing accounts.  However, the status of "dormant" is not something a company can simply "elect" to do, or, indeed, elect to reverse.  Amusingly, the only way a company can change its status from "dormant" to "active" is to undertake some transactions. And, to do that, it would need (yes, wait for it....) a Bank Account!

Another client has just moved from an address on the south coast to live in that delightful, and perhaps soon-to-be-independent, nation north of the border.  Legally, Scotland is (and always has been) a separate jurisdiction from England and Wales, and a company cannot change its domicile (i.e. its Registered Office) from one region to the other.  The client therefore asked to take up our offering to host the company's Registered Office at Richardsons' premises in Thame, which we were delighted to do.  However, when visiting a local branch of a well-known high-street bank, my client was told that "The account must be opened at the branch nearest to the Registered Office".  How convenient is it, when the trading address is in the Southern Highlands, to have to go to Oxfordshire to do any banking business?  Of course, it just isn't true, but this was only established after a great deal of time had been wasted.

So, I leave it to the economists and politcians to decide whether the "fat cats" at the top of the banks are to be blamed for the ills of businesses, small and large.  But I can tell you, from first-hand experience, that the those further down the food chain - shall we call them the "thin mice"? - are responsible for vast amounts of wasted time.  Is it not possible for banks to ensure that their staff are aware of the actual requirements when one of their customers wishes to open an account?  Or at least, when they don't know, can they be encouraged to refer the matter to a senior colleague who does know, rather than insisting on their ludicrous and misguided "requirements"?