Questions from Banks
Clubs frequently experience difficulty when dealing with banks, particularly when seeking to change bank mandates, open new accounts or update signatories. This often arises because banks apply company-based assumptions to organisations that are not companies.
Common questions raised by banks include:
While understandable from a banking perspective, these questions reflect a misunderstanding of how members’ clubs are constituted and governed.
Most members’ social clubs are not companies registered under the Companies Act 2006. Instead, they are commonly registered as co-operative societies, historically known as Industrial and Provident Societies.
These organisations are incorporated under specialist legislation, now consolidated in the Co-operative and Community Benefit Societies Act 2014. Incorporation under this legislation gives the club separate legal personality and limited liability, which is why the word “Limited” appears in the club’s name.
However, because the club is not a company, it does not appear on the Companies House register. Instead, its registration and ongoing regulation are overseen by the Financial Conduct Authority (FCA). Details of registered societies can be found on the FCA’s Mutuals Public Register, available via the FCA website.
Unlike companies, members’ clubs constituted as registered societies do not have directors or shareholders in the conventional sense. Clubs are governed by:
Committee members are not directors, do not hold shares in the commercial sense and do not own the club or its assets. Control is exercised democratically, typically on a one member, one vote basis, regardless of the number of shares held.
Banks are required to comply with strict anti-money laundering and “know your customer” (KYC) regulations. Their internal procedures are often designed around companies and partnerships, and bank staff may be unfamiliar with the legal framework governing mutual societies.
As a result, clubs are sometimes asked inappropriate or irrelevant questions. In such cases, the position can usually be resolved by providing the club’s FCA registration number, a copy of the current rule book, and an up-to-date copy of the Annual Return filed with the FCA.
A small number of clubs continue to operate as unincorporated associations. These clubs do not have separate legal personality, and committee members may be personally liable for debts and obligations. Banks are often particularly cautious when dealing with unincorporated clubs.
We strongly recommend that such clubs consider incorporation under the rules of a recognised sponsoring or governing body, to obtain limited liability and a clearer legal identity. Incorporation usually simplifies banking arrangements and significantly reduces personal risk for committee members.
Where difficulties arise with a bank, clubs should be prepared to explain their legal structure. If required, professional advisers can assist by providing confirmation letters or supporting documentation to satisfy banking compliance requirements. If you require further guidance on a club’s legal status, incorporation options or dealing with banks, please contact us.