You may have seen the recent article in Third Force News - 'High street banks failing Scottish charities'. Maybe you've experienced the issues highlighted in the piece. They certainly came as no surprise to us. Recently, at our events and through emails, we've seen an increasing number of concerns raised with us about the service that charities receive from banks.

Identifying the problems

During this year we've looked into these concerns, and from speaking to charities, banks, and sector bodies we've identified five key 'banking' issues:

• A lack of understanding from banks about the sector, particularly the operating environment for smaller charities.
• The complex and lengthy process some charities find when they look to change their signatories.
• The complex and lengthy process some charities find when changing legal form.
• General difficulties when trying to open bank accounts.
• Charities' own lack of knowledge and preparation in supporting their banking relationship.

So can and should we help as Regulator? Well, we do have a remit here. These issues have the potential to lead to ineffective financial management, and with respect to charities changing legal form, banking issues can act as a barrier, complicating our own processes for charities.

Building a better relationship

Your charity can help itself by ensuring that you understand and are prepared for the banking relationship and what it involves. For example, when looking to open a bank account, fully consider all of the services you may need and search for bank accounts that will deliver these. If you're considering changing you're charity's legal form, tell the bank once that decision is made so you know what's expected. Being prepared, informing the bank as decisions are made and understanding fully your own charity's needs will all help towards a more seamless relationship with your bank!

Understanding each other

What are our own ideas for helping to develop that important relationship between charities and their banks? Well, as we update key pieces of our guidance, we're going to include hints and tips about when and how charities should consider their banking relationships. We're already sending information to banks to highlight Scottish Charitable Incorporated Organisations, as we've found that wider awareness of this legal form is needed among the banks.We're also, with partner organisations and umbrella bodies, hoping to look at what information or literature is available for both charities and the banks, and see where we can add to this. For banks, we are considering producing material that highlights the specific peculiarities of charities and why they are different from businesses. For charities, something that helps them to ask the right questions to better understand their own banking needs.

Overall, we want to encourage an improved relationship between charities and their banks - and we believe that the best way to achieve this will be to work in partnership with the banks and the charity sector. Trustees are responsible for the general control and management of their own charity, with financial management a vital part of this. And, as regulator it matters to us that this is made as easy as possible.