British politicians are to be asked to reveal whether they have encountered problems or faced being “debanked”, as part of an inquiry by the UK’s financial watchdog.
The Financial Conduct Authority (FCA) said it is looking into the rules surrounding politically exposed persons (PEPs), which includes MPs.
The regime was thrust into the spotlight after former UKIP leader Nigel Farage revealed Coutts, which is owned by NatWest Group, had moved to shut down his bank account.
Farage was identified as a PEP – a UK or overseas public office holder, or someone with a relative who is. It means financial firms must treat their accounts with extra due diligence.
PEPs could effectively pose more of a risk of abusing their position for personal gain, such as by making or accepting bribes, according to the FCA’s guidance from 2017.
What is the FCA doing?
But the watchdog is now looking into whether banks apply the rules too rigorously and if they need updating. As part of its review, the FCA is sending a letter to British MPs on Tuesday.
An FCA spokesperson said: “We are reviewing how financial services firms have applied the politically exposed persons regime and whether any changes are needed for UK PEPs.
“We’re keen to hear directly from UK PEPs, including any problems they have encountered, so we’re proactively reaching out to parliamentarians and other UK PEPs at an early stage.”
As well as MPs, peers, and chairs of political parties polling more than five per cent, it is expected to engage with senior civil servants and the higher ranks of the armed forces.
They will be asked to share their experiences dealing with financial firms, particularly where it proved to be negative, which could include being refused an account or being ‘debanked’.
Who else was affected?
In July, Chancellor Jeremy Hunt revealed he had been denied a bank account with Monzo.
The Farage ‘debanking’ scandal culminated in the resignations of NatWest chief executive Dame Alison Rose and Coutts boss Peter Flavel.
NatWest also said it is undergoing an independent review into how Farage’s case was handled and the steps leading up to the decision to close his Coutts accounts.
The FCA is expected to publish the full terms of its review into the PEP rules in September and report back by June next year.
It is separately investigating the UK’s biggest banks and building societies to find out how many customers have had their accounts terminated or suspended, or been denied banking services, and the reasons why.
By Anna Wise, PA Business Reporter