The final item of business is a members’ business debate on motion S6M-19214, in the name of Jackie Dunbar, on banking charges for charities and not-for-profit organisations. The debate will be concluded without any question being put.
Motion debated,
That the Parliament expresses its concern that a reported increasing number of banks have introduced banking charges for small charities, community groups, community councils and other not-for-profit organisations; recognises what it sees as the immense work done in communities across Scotland, including across Aberdeen Donside, by these groups, many of which operate on tight budgets and are being affected by such banking charges; believes that most people are still feeling the consequences of having to bail out banks following the 2008 financial crisis and that banks that benefited from a bail out now levying banking charges on community groups is distasteful and hinders the work of these groups, and notes the view that banks should allow community groups to use their funds for the purposes which they were gathered for, instead of bolstering the profits of banks.
17:39
I thank every member who took the time to sign my motion in order to allow the debate to go ahead.
“For what will it profit a man if he gains the whole world and forfeits his soul? Or what shall a man give in return for his soul?”
Matthew, chapter 16, verse 26.
I lodged the motion for debate after the Rev Anne Robertson got in touch with me to highlight the difficulties that charities and voluntary organisations are facing, so it feels appropriate that I open with a Bible verse. I hope that she does not mind, and I welcome her, and members of her congregation, to the public gallery.
Every member of the Parliament will know of small community groups and charities in their constituencies that go above and beyond. Some of those are out-and-out charities; others will be community councils, church groups, men’s sheds, lunch clubs or walking groups, to name just a few. Those groups are what makes a community.
Despite the huge differences that those groups make, they do not handle much money. They often operate on shoestring budgets that have been funded from small donations. In recent years, however, such groups have started to get letters from their banks to say that they will need to start paying for banking services for their community or treasurer accounts. Some banks are now charging monthly or annual fees, while others are now charging for specific transactions.
For the small groups that are affected, that is chipping away at the very humble sums of money that they work with, and volunteers’ time is taken up in changing bank accounts to try to avoid those fees, if that is even possible—I know that some banks no longer allow new accounts to be opened. All that is compounded by the closure of local banks in the communities that we represent, which particularly disadvantages elderly and disabled people, many of whom are volunteers in those community groups.
On the point about branch closures, I will share the example of the Bank of Scotland, which is planning to close its branch in the Bridge of Don area of my Aberdeen Donside constituency in June. I will take aim at that bank shortly.
One of those letters, with details of new banking charges, was sent to a group in my constituency last year, and that is what caused the Rev Anne Robertson to email me. She is involved not only in her church. I should note that she and her Danestone congregation go out and help others. In fact, at the top of Danestone congregational church’s Facebook page, it says:
“OUR MISSION IS HELPING PEOPLE IN ALL WALKS OF LIFE”.
We can see that with the warm hubs and classes that the church runs; the food collections that it organises, which go to a local food bank; and the wider role that the church plays in its community. The Rev Robertson also volunteers with local charities that have nothing to do with her religion and everything to do with helping others. Those groups are among those that are being targeted by the bank charges.
To go back to the Bible verse that I opened with, why are banks seeking to profit from these groups? Such groups hold together their local communities, and they are being hurt by the charges. Are those banks—all of which, I believe, made billions of pounds in profits last year—now struggling so much that they need to charge a residents group 50p for writing a cheque, charge a Thursday club for depositing money and charge an exercise group £50 a year to keep its account open?
We have always had community groups and local charities, but their work has become much more important over the past two decades or thereabouts. Back in 2008, there was a financial crisis and it was decided that the banks needed bailed out, so the United Kingdom Government oversaw £137 billion of loans and share purchases. Shortly after that, we had austerity, although I accept that that was a political choice. Austerity was how all of us, and the people we represent, helped to pay for that bailout.
Austerity was how all of us, and the people we represent, helped to pay for that bailout—that was so good that I said it twice, Deputy Presiding Officer. Ironically, a number of the groups that are being affected by the banking charges were set up to meet the social need that came about because of austerity. We can say that austerity was a political choice, not a choice made by the banks, but the charges on community accounts are very much down to the banks.
The bailing out of the banks was painful for this country, and many in our communities are still feeling the effects of it. That is why the charges really frustrate me. People across the country have suffered through 15 years of austerity because the UK bailed out the banks, and those same banks have decided that their billions of pounds of profits are not enough and they need to squeeze extra pennies out of the hard-working community groups and charities that do so much, charging them to write cheques, deposit money and simply keep their accounts open.
I do not think that it is asking too much for banks to step up and support those groups, in the same way that this country stepped up and supported the banks. In fact, are these charges even supporting the banks? There is a benefit to banks of having these accounts and holding the funds that are deposited in them, in relation to keeping customers happy as well as promoting strong communities for banks to do business in. We are just asking them not to charge such groups for the same banking services that I, and other members, get for free. Our banks are failing in their social responsibilities—and they are our banks, or at least they once were.
Let us take the Bank of Scotland as an example, as it has upset me with its plans to close its Bridge of Don branch, and it is one of the banks that I often hear mentioned in relation to banking charges for community groups. The Bank of Scotland was established by the Parliament of Scotland and was able to grow as a result of the strong roots that it had across our nation. When things went badly, the people of this country bailed out the bank, including through share purchase.
Banks need to step up and work for the communities that helped them to become the multibillion-pound entities that they are today. If banks are not going to step up and start showing social responsibility, the UK Labour Government, which holds powers of banking regulation, must step in and make them do so.
17:46
I thank Jackie Dunbar for bringing the debate to the chamber, and I acknowledge the contributions of Danestone church, in particular, and Age Scotland, which have sent in contributions to assist us.
Across Scotland, thousands of volunteers raise money for their communities to support older people, maintain local facilities, organise community events and step in where statutory services cannot always reach. They give their time freely, and they accept responsibility for managing funds carefully and transparently. In turn, the public gives generously, trusting that what is donated will be used directly for the community benefit. Every pound is raised with intent, and every pound is to serve a purpose.
Most of those groups operate on a modest turnover and thus have very straightforward banking needs. They are not complex commercial bodies; they are local lunch clubs, art clubs and exercise classes. They are organisations that plan carefully, and they often raise income locally through raffles, subscriptions and small grants. Expenditure is allocated with precision.
However, Jackie Dunbar’s motion highlights the ever-increasing instances in which a portion of that money goes not to where it was intended to go but, instead, to the banks that hold it. An increasing number of banks have introduced charges on accounts that are held by charities, community councils and other non-profit organisations. Those include monthly account charges, transaction fees, costs for depositing cash and additional charges for writing cheques. For some groups, as Jackie Dunbar mentioned, those charges might amount to more than £50 a year. For others, in particular those handling regular cash donations or cheque payments, annual costs can approach £300.
Those charges have to be taken from hall hires, subsidised transport for the elderly and the cost of essential supplies, thereby steadily eroding the funds that are available for front-line activity. That places such groups in an invidious position. Do they reduce services, increase fundraising simply to cover those administrative overheads, ask volunteers to shoulder additional pressure, or all of the above? None of that enhances community resilience. Across the thousands of voluntary organisations that operate in Scotland, we are talking about millions of pounds potentially flowing from community hands into bank profits.
Let us not forget, too, that the issue is compounded, as Jackie Dunbar reminded us, by structural changes in banking provision. More than one in five people over the age of 60 in Scotland are not digitally connected, and the proportion is higher among disabled older people.
Many community groups rely on cash donations, as that remains the most accessible way for members to contribute, and digital banking is not necessarily appropriate for volunteer treasurers, who might lack confidence in online banking services.
We have debated recently in the chamber how bank closures severely restrict practical access to in-person banking. At a time when demand for community services grows ever larger, the charges, coupled with bank closures, are truly devastating.
We cannot be blind to the second part of Jackie Dunbar’s motion. We all remember the financial crisis and how the banks received billions of pounds in public support. The public that funded that rescue is the same public that is now volunteering at food banks and organising care for elderly neighbours, and being charged for the privilege. The public bailed out the banks, but the banks are now billing the public’s charities and voluntary work. That cannot be right.
Will Liam Kerr take an intervention?
I do not think that I have time for an intervention, unless—
I can give you the time back, Mr Kerr.
In that case, I would be delighted to take the intervention.
I thank Liam Kerr for taking the intervention. I will make it brief.
On the point about the banks having benefited from the bailout, does Liam Kerr agree that that means that they now have a moral obligation to guarantee the Scottish public a public service that benefits people, rather than one that is solely about corporate profit?
The point that is being made is that the public bailed out those banks, and I think that it is morally dubious for the banks then to charge that very same public, which kept them afloat and solvent, for running community services. I am sure that Mercedes Villalba will expand on the point later, but I think that it is an interesting point that was well made.
This debate is not about undermining the viability of sustainable banking; it is about recognising the distinct role of non-profit organisations in Scotland. Community groups are, in general, not profit-seeking enterprises; they exist to meet local need, promote inclusion and improve overall wellbeing.
There is genuine concern across Scotland that already-stretched resources are being eroded by banking charges. Money that is raised for public benefit should be used for the purposes for which it was gathered, not to bolster bank profits. Banking arrangements for small charities should reflect their scale, function and social value. Banks should support Scotland’s voluntary sector, not incrementally burden those groups. I join my colleagues across the parties in the chamber in hoping that the banks think again when it comes to the charges.
17:52
I am pleased to speak in support of the motion that Jackie Dunbar has lodged on an issue of importance to communities the length and breadth of Scotland. My Cumbernauld and Kilsyth constituency is no different in that regard.
I value the immense contribution that charities, voluntary organisations, community councils and not-for-profit organisations in Cumbernauld and Kilsyth make day in, day out. In my area—I am sure that this is the case for every MSP—we are blessed with an abundance of fantastic community organisations, which are often reliant on volunteers doing tremendous work for our local community. That is a vivid demonstration and reminder of the great sense of community spirit that we have in Cumbernauld and Kilsyth.
Local groups such as Cumbernauld and Kilsyth Care, which operates a school uniform bank, a baby bank and a clothing bank, provide practical help for families in need by pooling community resources to support children, carers and parents in very real ways. I should say that my wife was involved in establishing that charity, and I saw clearly, at first hand, how much effort went into that.
Another organisation is Watch US Grow, which, from its own dedicated garden in Palacerigg country park, works with and supports adults with additional support needs, creating opportunities for them to acquire new skills, to grow in confidence and to be able to live more independent lives.
We also have Cumbernauld and Carbrain community hub, Cumbernauld community memorial peace garden and the Kilsyth environmental group, and there are many sports and arts organisations in my constituency, along with various community councils. All those organisations are built on the backs of the efforts of local people, and they all deserve support.
Those organisations, and the many thousands like them throughout Scotland, rely on every penny that they receive. They do not operate on the basis of having large reserves—they often depend on volunteers, modest fundraising efforts and the goodwill of local people. Any diversion of funds away from their core purposes, even if it is felt to be small, diminishes their ability to support those who most need and rely on the services that they provide.
However, we are seeing changes across the banking sector, with charges being introduced for accounts that are held by small charities and community groups, which previously had no such charges. For organisations with annual incomes that are often measured in only a few thousand pounds—indeed, sometimes less—even modest monthly fees and transaction charges can represent a significant proportion of their available resources.
Will the member give way?
Yes, of course.
I just want to point out that, while I completely agree that we should be critical of the banks that apply these charges to local groups that do so much work, we should recognise that some banks do not do so. At this point, I should say that I am a Co-operative Party member. My understanding is that the Co-operative Party runs a banking system that does not charge fees for charities. We have also seen the expansion of banking hubs to make it easier for local groups to access banking where there is a shortage of branches, which helps them to access a variety of different types of account.
I can give you the time back, Mr Hepburn.
I am not sure that I would have given way if I had known that the member’s intervention was going to be an advert for the Co-operative Party, but I take her point. Banking hubs have an enormous role to play, and I was very pleased to see that Kilsyth will be getting such a hub in due course.
I want to pick up on a point that has been made in the debate. Jackie Dunbar’s motion refers to the circumstances in 2008 when public funds were used on what was an unprecedented scale to stabilise the banking system. Taxpayers stepped in to protect financial institutions and the wider economy. On that basis, it is entirely reasonable to question whether it is appropriate for those same institutions to seek to recoup revenue from the very community organisations that hold our social fabric together and the very communities that funded the stabilisation of the banks almost two decades ago.
We should be looking for social return from the banks. Jackie Dunbar made the reasonable point that it should not be too much to ask that banks provide that form of social return. I agree with that, but I think, more fundamentally, that they should be told to provide it. We can cast it as a moral obligation, as Mercedes Villalba and Liam Kerr did in their exchange, but there are practical steps that can and should be considered. The UK Government has responsibility for banking regulation, and I believe that it should engage directly with banks—not to ask them, but to require them to provide protected, fee-free basic accounts for registered charities and small not-for-profit groups. The UK Government should ensure that conditions linked to past or on-going public shareholdings reflect the need for a social obligation on the part of banks.
In addition, the Financial Conduct Authority could review whether the cumulative impact of charges and branch closures—as has been mentioned—is creating barriers to fair access to essential banking services for the third sector, and it could consider producing guidance that recognises the distinct nature of micro-charities and volunteer-run groups. Those are practical steps that I believe should be taken. Community organisations should be enabled, not hindered, in their work, and they should be able to dedicate the funds that they raise to community benefit, not to the bolstering of bank profits.
17:58
I thank Jackie Dunbar for lodging the motion and for the debate that has ensued. I enjoyed much of her speech—if she does not obtain ministry in the Parliament, there is perhaps a calling to a different type of ministry in her future, given her opening Biblical verse.
We are debating a very important issue, as has been articulated by colleagues across the chamber. I declare an interest as a trustee of a charity in Neilston—the Neilston War Memorial Association—that uses banking services, for which it is now being charged by the Bank of Scotland. I recognise that that is a significant challenge for an organisation that was set up principally to be the custodian of the local war memorial and to provide remembrance events, and therefore does not carry a huge amount of money in its bank account, as it is now losing money through the bank charges that are being applied.
That is set against a backdrop in which other charities in the community are facing the same problem, and in which the Bank of Scotland has withdrawn its branch in Barrhead—the last bank in the town. That issue has been raised in the chamber on numerous occasions, in concert with colleagues across the country, who are seeing the diminishing of banking services. It is therefore becoming more difficult to operate as a charity.
Having slightly teased Jackie Dunbar about her speech, I will say that later in the gospel of Matthew, Jesus says:
“render to Caesar the things that are Caesar’s, and to God the things that are God’s.”
People read that in different ways, but what it says to me is that we should let people get on with doing what is God’s work, or what is the common good—that is, the work that charities do—and leave the other bits to the state. That relates to much of what we have covered this evening. At the end of the day, charities do not want to be caught up in having to do overburdensome administration or to be charged simply for doing what is right and good. Charities are playing by the rules. They are doing everything right. They adhere to the rules and regulations of the Office of the Scottish Charity Regulator. For all the reasons that we have heard outlined by colleagues, what they do not need is banks trying to make a profit off the back of their good endeavours.
If we expand on that biblical verse about rendering things to the right place, we can say—rightly, as we have heard articulated in the debate—that taxpayers have rendered to Caesar the money that was paid in to support the banks during the financial crash. Colleagues on this side of the chamber who know Gordon Brown and people like him know that, when he envisaged the plan to rescue the economy back in 2008, the end point was probably not seen as a position in which banks were able to make profits off the backs of charities, many of which he now supports and is involved in across Fife and elsewhere in the country.
As we have heard, there are clearly banks that are doing the wrong thing, and, as my colleague Claire Baker pointed out, there are banks that are doing the right thing. The Co-operative Bank is based on the values of the co-operative movement, which goes back hundreds of years and has a very proud heritage and history involving organisations such as the Fenwick Weavers Society that were set up by people coming together to create mutual concerns and to own their endeavours together. That sort of banking needs to be prioritised and supported.
Although we might call for legislation and intervention in order to regulate the banks—a call that I think has merit—we also need to look at how we support better ways of doing banking, whether that involves the credit union movement, mutuals or whatever. Those approaches are important, and expanding those opportunities to local charities and community groups could be a game changer for them in terms of where they can deposit cash and have their assets protected, so that they can continue to do the work that is greatly valued in all our communities across Scotland.
There is a degree of consensus across Parliament this evening, which is always good to hear. I am sure that we will return to this issue in order to try to get the right solution.
18:02
I thank all members who have contributed to this afternoon’s debate, especially Jackie Dunbar, who very passionately articulated the essence of her motion.
Access to banking and financial services is fundamental to a strong, resilient economy and to the wellbeing of our communities. That principle holds true not only for businesses but for the thousands of charities that are working tirelessly across Scotland. Every one of us in the chamber recognises the essential role that the third sector plays. Charities and community organisations support our people, strengthen our neighbourhoods and often step in where the need is greatest. It is therefore vital that our financial systems operate in ways that enable, not hinder, their work.
Although financial services regulation remains reserved to the UK Government, we will continue to press banks and financial providers to listen carefully to their customers and to address the practical barriers that many charities face. Those organisations deserve services that reflect the realities of their work.
I will take a minute to acknowledge the contributions of members.
Liam Kerr clearly gave examples of the good work that charities do and the distinct role that the voluntary sector plays, but he also spoke about the impact of bank charges on what can be very small funds. Thankfully, many charities’ funds fall below the thresholds for charging, but that point was well made.
Other members highlighted the amazing work that volunteers do. I point out to Jamie Hepburn that 66 per cent of charities have no paid staff at all and rely solely on volunteers, which shows how essential they are.
The Scottish Government always stands ready to work constructively with the UK Government, regulators and sector stakeholders to ensure that charities across Scotland have long-term, sustainable access to the banking services that they rely on, and has previously engaged with the Financial Conduct Authority regarding the matters that have been raised by Ms Dunbar. In February this year, the FCA responded to Scottish Government officials and confirmed that it recognised the importance of third sector organisations being able to access appropriate financial services, but stated that, at present, it has not been provided with evidence indicating that charities or community groups are routinely being charged unfairly. However, it said that it is aware of broader banking challenges facing third sector organisations, and that, where it sees evidence that firms are consistently failing to meet standards, it will consider the need for regulatory intervention. I therefore encourage charitable or community organisations that feel that they have been treated unfairly to contact the FCA, so that the issues facing the sector can be recognised.
I understand that the Charity Finance Group and the three UK charity regulators are already working with the banking sector to ensure that the challenges that face the charity sector are fully understood. I express my thanks to them for the work that is already under way. The Scottish Government supports that engagement and will work closely with them and the FCA as more evidence emerges.
Charities are at the forefront of supporting some of the most vulnerable people in our society, and they respond daily to economic pressures and social challenges. To do that effectively, they must have reliable and timely access to their funds. Robust financial governance is a cornerstone of charity regulation, and appropriate financial controls are central to that responsibility. Charity trustees carry a clear legal duty to protect their charity’s assets, and they must have systems in place that allow them to fulfil that duty confidently.
For all those reasons, we will continue to do what we can to promote banking services that work properly for the third sector. Those organisations, which provide vital services, deserve a financial system that recognises and supports their contributions.
I recognise the challenges that are being faced. That is why the Scottish Government is committed to delivering fairer funding for the third sector. Our initial fairer funding pilot provided £130 million in multiyear funding. We are building on that with the announcement in the budget that disabled people’s organisations will receive a separate three-year funding agreement. Just last month, we announced additional multiyear investment in the delivering equally safe funding to national providers of advice services. All of that together means that almost half the total value of the third sector grants in the social justice portfolio in 2025-26 is now covered by multiyear funding agreements.
We want to go further and build on the progress that we have made, which is why the Cabinet Secretary for Social Justice announced that we will work with the third sector to deliver Scotland’s first-ever third sector partnership to further strengthen the role and place of the sector in Scotland. That new partnership will create a unique and valuable opportunity for Government to work more effectively with the sector and build on that progress.
To conclude, the third sector plays an indispensable role in our national life. It is essential that financial services work for it in practice, not just in principle.
Meeting closed at 18:09.
Air ais
Decision Time