According to a Treasury minister, it is important to prioritize a review into whether banks are closing accounts for customers who are "politically exposed.".
Andrew Griffith argued in a letter to the Financial Conduct Authority that it was critical that elected officials' families have access to banking services.
After Nigel Farage claimed that his account was being closed because he had been "politically exposed," this claim has been refuted by those familiar with the action.
For a response, the FCA has been contacted.
Politically exposed individuals, or PEPs, typically pose a greater risk to financial institutions because they are thought to be more susceptible to engaging in bribery and corruption because of their position and potential for influence.
Banks must conduct additional due diligence on PEPs as a result.
While acknowledging the significance of measures to prevent money laundering, Mr. Griffith, the Economic Secretary to the Treasury, wrote in a letter to the financial watchdog that "it is crucial that an appropriate balance be struck" so that elected officials and their families can access banking services.
The fact that "some financial institutions may be failing to strike the right balance of taking a proportionate approach based on a careful evaluation of the actual risk" had been "made clear," he continued.
According to Mr. Griffith, "the government is clear that domestic PEPs should be treated in a manner consistent with their risk, and that banks should not be closing people's accounts solely because they are PEPs.".
The former leader of UKIP, also known as the Brexit Party, and a former member of the European Parliament, Mr. Farage, claimed this week that his bank was closing his accounts without a reason.
He claimed that he thought his account was being closed as a result of his PEP status and that nine additional lenders had since rejected him.
However, the BBC has been informed that Mr. Farage did not meet the financial requirements to maintain an account at the prestigious private bank for the wealthy, Coutts.
The fact that Mr. Farage did not meet Coutts' requirement was uncontested on Tuesday, but he added: "They didn't have a problem with it for the last 10 years. ".
Draw your own conclusions, he continued, "Are you telling me that Coutts wasn't a PEP thing and all the other banks say it was? ".
The Treasury has previously stated that it would be of "serious concern" if people who are exercising their right to free speech were denied access to financial services.
In order to strike the right balance between the customer's right to free speech and the bank's right to manage commercial risk, a spokesman said: "We are already looking into this issue and have passed a law that requires the Financial Conduct Authority to review how banks treat politically exposed persons.