Britain’s Financial Conduct Authority (FCA) has called on lawmakers to report any difficulties they encounter while opening or maintaining a bank account, as part of a broader investigation into the issue of debanking. This move comes after Nigel Farage, former leader of the Brexit Party, claimed that his account with private bank Coutts was closed due to his political views.
The FCA aims to review how financial services firms apply the Politically Exposed Persons (PEP) regime, which imposes stricter checks on politicians, their families, and close associates opening and maintaining bank accounts. These individuals are seen as more susceptible to bribery and corruption due to their potential influence on decision making and fund transfers.
Last month, Britain’s financial services minister, Andrew Griffiths, requested that the FCA consider creating a domestic PEP regime to reflect the lower level of risk from those without an international role. In response, the FCA plans to gather evidence from UK PEPs, including parliamentarians and other individuals in senior positions. The watchdog will begin by reaching out to lawmakers from both Houses of Parliament, as well as leaders of political parties with a polling rate of over 5%, senior civil servants, and senior ranks of the armed forces.
The PEP rules were initially drafted by the Financial Action Task Force on money laundering, and the FCA issued guidance on their application in 2017. The current review is separate from an urgent data gathering exercise into the extent of debanking called for by British finance minister Jeremy Hunt, who suggested that lenders engaged in widespread and unwarranted debanking should face fines.
The FCA intends to gather early evidence before publishing the full terms of reference for the review in September, with a report expected in June of next year. The aim is to ensure that the review considers real-world experiences and any encountered problems faced by UK PEPs.
This investigation by the FCA seeks to address concerns surrounding the closure of bank accounts based on political views. By reviewing the application of the PEP regime, the FCA aims to determine whether any changes are necessary to ensure fairness and proper risk categorization. The inclusion of UK PEPs in the gathering of evidence reflects the FCA’s commitment to capturing varied perspectives and providing a balanced review.
