By Sarah Johnson, Head of Public Sector at Unity Trust Bank

As Head of Public Sector at Unity Trust Bank, I've had the privilege of working closely with local councils across the UK, understanding their specific banking challenges and helping to create solutions that genuinely work for them. Recently, I was invited to speak at a Scribe Academy webinar where I shared insights about our approach to council banking and addressed many common questions and concerns.

I'd like to expand on those topics here, focusing on what makes local council banking unique and how a specialist approach can make all the difference.

Understanding Local Council Banking Needs

Parish, town, and community councils face distinct banking challenges that often aren't well addressed by high street banks. From my experience working with over 3,000 councils, these are some of the key pain points:

1. Inappropriate Onboarding Processes

Many high street banks use generic business account opening forms that ask for shareholders, directors, and business plans—terminology that simply doesn't apply to council structures. This fundamental misalignment leads to frustrating experiences:

• Forms get rejected because they don't fit council structures
• Inappropriate documentation is requested
• Councils waste valuable time explaining their setup to bank staff unfamiliar with local government

2. Excessive Identity Verification Requirements

Standard bank procedures often require identification verification for all council members, regardless of their involvement in banking activities. This creates unnecessary administrative burden, especially for councils with frequent membership changes.

For customer who may require a Lloyds Multipay Charge Card, they will be advised of the verification process at time of application.

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3. Dual/Triple Authority Needs

Unlike many small businesses, councils require robust payment approval processes with multiple signatories as part of their governance structure. As one attendee at our webinar noted, a lack of dual authority for online payments forces councils to create "really silly processes" with separate spreadsheets and printed emails to demonstrate proper authorisation.

4. Balance Between Accessibility and Interest

Many councils struggle with significant funds sitting in current accounts earning no interest while still incurring charges. As several council representatives shared during our Q&A, they need flexible ways to manage reserves, earmarked funds, and working capital with appropriate interest returns.

Specialist Banking Solutions for Councils

Based on these unique needs, here's how a specialist approach to council banking can help:

1. Sector-Specific Account Opening

At Unity, we've developed bespoke account opening forms using appropriate council terminology—discussing precepts, councillors, and clerks rather than shareholders and directors. Our new form (launching soon) specifically asks about your council activities, precept, and other relevant information.

Our streamlined approach means we typically open new council accounts within 3-5 working days, compared to the much longer timelines often experienced with high street banks.

2. Practical ID Verification

We only require verification for individuals directly involved in banking activities—those who are signatories or have online access. For most verifications, we use automated electronic checks that require no additional documentation. Only when these automated checks can't verify identity do we request traditional documents like passports or utility bills.

3. Robust Online Banking Controls

Our online banking platform offers dual and triple authorisation options to ensure proper governance. You can also set different access levels and spending limits for different individuals, creating a flexible system that works for your council structure.

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4. Optimised Fund Management

A common question I receive is about maximising interest on council funds. We offer a range of options:

• Current accounts (£6/month) for day-to-day operations (not interest bearing)
• Instant access savings accounts (currently 2.25% Gross/ 2.27% AER)
• Fixed-term deposit accounts ranging from 30 days to 12 months (currently up to 4.1% Gross/AER)

Councils should consider what is right for them. For example, a mixed approach—keeping working capital in your current account, emergency reserves in instant access, and longer-term funds in fixed deposits matched to your spending timeline.

Real Solutions for Common Council Issues

During our recent webinar, several specific situations were raised that might resonate with your council:

Challenge 1: "We have £600,000 in a current account earning no interest but incurring charges."
This is far more common than you might think! A dedicated relationship manager can help structure your accounts to keep operating funds accessible while placing reserves in appropriate interest-bearing accounts.

Challenge 2: "We don't want to move our day-to-day banking but need better interest options."
It is possible to maintain your existing operational banking while opening specific accounts for reserves. Make sure you consider any fees associated to understand which is the most cost-effective route for you.

Challenge 3: "Our councillors are not tech-savvy and can't handle electronic signatures."
You can still use a paper option. You can complete forms online, then print them for wet signatures. These can then be scanned and emailed back or posted to us. Or our team are on hand to help you with completing things online. 

Challenge 4: "We need to stay under the £85,000 FSCS protection limit."
This is a common concern, especially for councils with substantial reserves. The Financial Services Compensation Scheme (FSCS) protection is per banking institution rather than per account, so spreading funds across different banks can provide additional protection. (Note that the PRA is currently reviewing potentially increasing this limit to £110,000 – Consultation ends in August, and further information will be publicly available at that time).

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Ethical Banking Alignment

Beyond solving practical banking challenges, I find many councils are increasingly interested in ensuring their banking aligns with their community values. As a purpose-led bank founded in 1984, Unity operates on what we call our "double bottom line"—delivering both financial and social returns.

All deposits with Unity are used to fund organisations and projects creating positive social impact through our lending program. We only serve customers who demonstrate positive community impact, supporting the United Nations Sustainable Development Goals. This ethical foundation often aligns well with councils' community-focused missions.

Looking Forward

As we continue to develop our council banking services, we're working on several improvements:

• Our new council-specific application form launching in summer 2025
• Integration with council accounting software like Scribe
• Review of our fixed deposit renewal process
• And as we continue to develop our council banking services, we are working on a number of other improvements. 

Connect With Us

If you're considering a banking change or would simply like to talk about optimising your current banking setup, our Public and Third Sectors team is here to help. You can reach us at localcouncils@unity.co.uk or visit our dedicated council resources at www.unity.co.uk/sectors/local-councils

Watch the Full Webinar

Did you find this information helpful? There's much more to learn! Watch the complete webinar recording where I provide additional details about Unity Trust Bank's offerings and answer many more questions from council representatives about their specific banking challenges.

CLICK HERE TO WATCH THE FULL WEBINAR RECORDING →

The webinar includes:

• A detailed walkthrough of our account opening process
• Current interest rates and account options
• Step-by-step guidance for switching banks
• Extended Q&A addressing common council banking concerns

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For personalised assistance, please email us at localcouncils@unity.co.uk or book a consultation with one of our regional deposit relationship managers.

Sarah Johnson is Head of Public Sector at Unity Trust Bank, leading a dedicated team supporting over 3,000 local councils across the UK. With decades of experience in ethical banking, Sarah specialises in helping councils align their banking with community values while maximising financial efficiency.

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