FCA urges banks to improve treatment of politicians after Farage debanking row
Banks must do more to ensure politicians and senior public servants are “not treated unfairly” when trying to get bank accounts, the City watchdog said today.
Over the last few months the Financial Conduct Authority (FCA) has been reviewing the treatment of so-called politically exposed persons (PEPs) after the Nigel Farage-initiated debanking brouhaha last year.
The FCA found that most firms in its review did not subject PEPs to excessive or disproportionate checks and none would deny them an account based on their status.
However, the regulator said “all firms could improve” and noted that it was initiating a more detailed review of firms’ practice “in a small number of cases”.
“Public service naturally comes with greater scrutiny. But it must be proportionate and shouldn’t disadvantage people running for office or taking senior public roles, or their families. That requires a balancing act,” Sarah Pritchard, the FCA’s executive director of markets and international.
“Most firms try to get it right but there is more they can do. We’re following up with those firms that were getting the balance wrong to ensure they make changes,” she said.
The regulator said firms should tighten the definition of a PEP to the minimum required by law and review the status of PEPs once they leave public office.
Where possible, banks should explain the reasons for their actions regarding PEPs.
Lenders should also consider “the actual level of risk posed by the customer” while improving the training of staff who deal with PEPs.
The treatment of PEPs, such as Farage, shot up the agenda last year after it emerged Nigel Farage lost his bank account with Coutts due to his political views, leading to the resignation of Allison Rose and the Coutts boss.
An independent review found in December that account closures at Coutts were in line with industry standards and showed “no evidence of discrimination due to political views” but flagged “deficiencies” in its communication on the issue.
PEPs are individuals in prominent public positions. Financial institutions have to conduct stricter checks on PEPs, who are deemed more likely to be involved in corruption or bribery.