The Financial Conduct Authority has warned banks it “will act” should politicians be wrongly “de-banked” because of their views.
It comes after former UKIP leader and ardent Brexiteer Nigel Farage had his account closed at exclusive bank Coutts in late June. He said he was then refused accounts with other banks because of his political views.
FCA executive director Sarah Pritchard, writing in The Telegraph, said the regulator is now reviewing whether financial institutions are being “proportionate” in their risk assesment of “politically exposed persons” (PEPs). She says while it is necessary for those in power to be asked for more information than other sources of wealth, this needs to be an “appropriate level of inquiry”.
She said: “(It) should not feel like the financial equivalent of someone rifling through your bin.
“We have heard that often it has, particularly for the families of political figures.
“If we find that banks and others are more tick-box than risk-based, we will act. Because proportionate additional financial scrutiny should not make it harder than it needs to be to take part in public life.”
In the wake of the Farage row, Dame Alison Rose, the CEO of NatWest, the company that owns Coutts, stepped down from her role. The scandal brought on calls from the Treasury and ministers for the FCA to conduct a review into whether financial institutions are meeting their guidance over the treatment of PEPs and whether that guidance needs to be updated.
Pritchard said the FCA are conducting a review focusing on how “firms are applying the definition of PEPs to individuals” and “checking that firms are being proportionate in their risk assessments of UK PEPs”.
“This sets out that banks and others must be proportionate – with greater scrutiny on those who pose the greatest threat. And we have been clear that UK public figures should generally be considered low risk,” Pritchard said.
Ms Pritchard added that the aims of the review are to keep the “system clean” but not deny PEPs the access to financial products and “services necessary for everyday life”.
