Banks must improve treatment of politicians - FCA
18th Jul 2024 11:32
(Sharecast News) - The financial regulator has warned banks must do more to ensure political clients are treated fairly, it was announced on Thursday.
Publishing a review of rules surrounding politically exposed persons, the Financial Conduct Authority found that most banks, payment firms and lenders did not treat PEPs poorly.
It said most firms had not subjected parliamentarians, senior public servants and their families to "excessive or disproportionate" checks, nor had they been denied accounts based on their status.
But it also found that firms could still improve.
In particular, it said institutions should ensure the definition of a PEP meets minimum legal standards, that they review the status of PEPs when they leave office and that they "effectively consider" the actual level of risk posed.
Sarah Pritchard, executive director of markets and international, said: "Public service naturally comes with greater scrutiny. But it must be proportionate.
"That requires a balancing act. 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."
So-called de-banking was thrown into the spotlight last year, after it emerged that Nigel Farage had been refused an account at Coutts.
The private bank, part of NatWest, originally claimed it was because he no longer met the strict financial requirements needed to qualify for an account.
But internal documents revealed the bank was concerned about his political beliefs. A lead campaigner for Brexit, Farage is now head of Reform UK and was elected an MP, on his eighth attempt, in the 4 July general election.
A probe by the FCA launched in response did not find widespread evidence of de-banking. But it also said in January that UK politicians should be treated as lower risk than overseas ones.
The FCA has now opened consultation and interested parties have until 18 October to make a submission regarding changes to the PEP guidance.