Kevin Craven, chief executive of ADS, warned the lack of access to banking for companies posed a serious threat to the Ministry of Defence’s efforts to work with innovative start-ups developing key technologies of the future.
He said: “You cannot have a free society unless you have a strong defence sector that keeps everyone safe, so this is absolutely something that needs addressing urgently.
“The best solution to this, we think, is more transparency around why defence companies are being refused.”
Sir Ben Wallace, another former Tory defence secretary, also said: “As war and insecurity spreads across the globe, it is time for our financial institutions to stop this vacuous virtual signalling.
“Without security there can be no ESG. We need to unlock funds for British technology that will help keep us safe.”
‘We were viewed as unclean’
One entrepreneur behind an aerial drones start-up that is currently trying to open a business bank account, who spoke on condition of anonymity, said his firm had been turned down by HSBC, NatWest and Royal Bank of Scotland, a NatWest subsidiary.
He told The Telegraph: “They all give risk as the main reason. There is just total unwillingness to work with businesses in the defence sector.
“It is totally at odds with the UK Government saying it wants to bring new and novel technology into the military, because we can’t even get the basic financial tool we need to start a business.”
An executive at the major guns supplier said his company had endured a fruitless nine-month search for a bank account that resembled “a comedy of errors and incompetence”.
Plymouth-based MSubs, which is building unmanned submarines for the Royal Navy, said his company initially struggled to find any bank that would deal with it until it eventually settled with its current lender.
Brett Phaneuf, the company’s chief executive, said: “We went to every major bank and it was always the same. We were viewed as unclean.
“But the only reason they’re free to discriminate is because small businesses and large businesses like ours provide the arsenal of democracy. I mean, where does this end?”
Laurence Bedford, UK head of Australian drone maker DefendTex, said his company was at one point unable to be paid for its work as it scrambled to secure a bank account in 2020.
He added: “It’s not like we were doing business with foreign enterprises or anything – we were doing business with the UK Government and the big defence primes – but you still can’t get a bank account.
“It’s very, very frustrating.”