A recent account closure by Starling Bank has stirred concerns in the startup community.
- Alicia Navarro, founder of Flown, faced account closure due to investor-related policy.
- Navarro claims the bank’s policy affects all UK startups with venture capital backing.
- Starling Bank’s communication highlights its policy shift affecting corporate shareholders.
- This incident raises broader concerns about banking requirements for startups in the UK.
Alicia Navarro, founder and CEO of Flown, a London-based tech company, expressed her surprise and criticism regarding Starling Bank’s recent decision to close her company’s business account. The bank cited a policy that prohibits limited companies from having corporate shareholders as a reason for closure. Navarro, who took to LinkedIn to voice her disappointment, stated, “I’m astounded. We’ve been banking with Starling from the beginning, for four years, and have always had VCs as investors.” She emphasised that the policy, which is designed to ensure all persons of significant control are UK residents and natural persons, could pose a challenge for virtually every venture capital-backed startup in the United Kingdom.
In a call with Navarro, Starling Bank clarified that the presence of venture capital investors, who are often corporate entities, put Flown in breach of the bank’s terms and conditions. Despite her attempts to reason with the bank by highlighting her longstanding relationship and compliance with initial criteria, the bank maintained that they could not make exceptions, indicating a firm adherence to new internal policies.
This unilateral policy shift by Starling Bank comes amid increased scrutiny on banking accountability and regulatory compliance across the sector. Navarro’s account closure highlights a growing friction between banks seeking stricter adherence to compliance measures and the operational realities of modern startups. The specific requirement for business accounts—that all significant controllers be natural persons—appears designed to bolster transparency and reduce financial crime risks, a priority underscored by recent industry trends.
Navarro’s experience has sparked a broader conversation about the impact of such banking policies on small businesses and startups in the UK. Many in the startup community see the move as a potential barrier to growth, particularly for new businesses seeking venture capital support. It also sheds light on the regulatory expectations businesses must navigate, which include the requirement to declare ultimate beneficial ownership publicly.
This situation with Starling Bank brings to light the delicate balance between regulatory compliance and fostering an environment conducive to startup growth. With Starling standing as one of the UK’s prominent challenger banks known for innovation, this event serves as a critical point of reflection for both banks and emerging companies operating within the UK’s financial ecosystem.
The controversy surrounding Starling Bank’s account policy highlights the complex relationship between startups and financial institutions.
