They could’ve shortened that whole story, and crushed a load of ads alongside it if they just had the first and last couple of paragraphs.
When retired restaurateur Adrian was invited with his wife Christine to a family wedding in Italy next year, he decided to open a savings account to set aside funds to pay for the trip.
So far, so simple. Except the 83-year-old was baffled and outraged in equal measure when the bank he has used for the past five years, Starling, blocked him.
Starling Bank said: ‘Although we have approved tens of thousands of Easy Saver applications since soft launching in November, we have had to decline some too in line with certain eligibility criteria. We are sorry about any inconvenience this causes, and we are working hard to open as many accounts as we can.
‘We are currently subject to certain constraints around opening new accounts… The decision to decline an Easy Saver application may well be a result of the constraints, not an individual’s circumstances.’
You’ve got to wonder how knowledgeable This is Money is about financial news if they’re not aware of the constraints that Starling has had imposed on them at the moment?
Of all the places that are going on at Starling, this is the one that mystifies me the most. What reason would you have to block your customers from opening a savings account? It’s going to drive those people away.
What I assume has happened is that during Covid, when they were trying to get as many new customers as possible to offer the Covid Business Loans, but there was confusion over how much background check they can do, they relaxed the onboarding ‘know your customer’ rules. The guy that story was about had been a Starling customer ‘for 5 years’ - ie since Covid.
Anyone who signed up during that time have now had their account flagged as not being fully onboarded and so can’t apply for another account until that’s been resolved.
Anyone who signed up at any other time have gone through KYC so are eligible for any account Starling offer based on their own individual eligibility.
Why Starling still haven’t resolved fixing those accounts though after 5 years in something that only they know - maybe they have decided the cost to fix it isn’t worth it compared to the number of accounts impacted?
I think the argument is still valid though in that they couldn’t cope with the growth in new accounts. When I joined, they had under a million, a few years later it was into the millions.
I think the key problem is that it’s an account. If it were an interest bearing space, they’d likely have been OK. That said, quite why an interest bearing space is fundamentally different from an ‘account’, I don’t know.
Because you can still use a savings account to launder money.
Digging into the FCA sanctions, the issue identified was that between June 2022 and Jan 2023, the automated screening process that Starling used that was supposed to alert any potential money laundering activity did not raise any alerts at all on any transactions.
So, the FCA thought that’s pretty suss.
As a result of that, as well as the £28m fine they received, as a result of those concerns, Starling commenced an AML Enhancement Plan to address the FCA’s concerns and voluntarily accepted a requirement from the Authority in September 2021 (the VREQ) not to open any new accounts for high or higher risk customers while it improved its AML control framework (https://www.fca.org.uk/publication/final-notices/starling-bank-limited-2024.pdf)
So, Arnie7 - if you can’t open a savings account, it because Starling have flagged you as a high risk customer. Have you been sending suspicious transactions over to the Bahama’s at all?
From the FCA final notice published Sept 2024 (which I linked to above):
The Authority identified serious concerns with Starling’s anti-money laundering and
financial sanctions framework during its review of financial crime controls at challenger banks in 2021. As a result of those concerns, Starling commenced an AML Enhancement Plan to address the FCA’s concerns and voluntarily accepted a requirement from the Authority in September 2021 (the VREQ) not to open any new accounts for high or higher risk customers while it improved its AML control framework.
Obviously, what we don’t know is how they’re now scoring their customers as high/higher risk customers.
Starling also identified in January 2023 that, since the implementation of its financial sanctions screening framework in 2017, its automated screening system had only been screening the names of new and existing customers against a fraction of the names on the Consolidated List. Although Starling took immediate steps to remediate this fault, its subsequent review of its financial sanctions framework identified wider systemic issues including Starling’s assessment of its financial sanctions risk, policies and procedures, testing and calibration of screening systems, and a lack of MI regarding alert volumes and trends.
