Banks have been told to do more to ensure MPs, peers and their families are treated fairly after a review by the City watchdog in the wake of the Nigel Farage debanking affair.
The Financial Conduct Authority said all lenders could improve how they checked an estimated 90,000 politically exposed persons (PEPs) deemed to be vulnerable to bribery or corruption because of the public office they hold.
The review followed a row last year when Coutts, the private banking arm of NatWest, closed Nigel Farage’s account.
‘Debanked’: Reform party leader Nigel Farage (pictured) claimed he was targeted because of his political views
The Reform party leader said he was ‘debanked’ because of his political views. He obtained a memo from Coutts calling him a ‘disingenuous grifter’ whose views did not align with the bank’s.
An independent review found his account had been closed mainly for commercial reasons but the affair cost NatWest chief executive Alison Rose her job.
The scandal also raised wider concerns about the way customers such as charities and small businesses are treated when their accounts are shut.
Last year The Mail on Sunday revealed lenders were shutting almost 1,000 accounts a day – a seven-fold increase on 2016 – in a ‘shoot-first-ask-questions-later’ approach to anti-money laundering rules.
Almost all accounts were closed because of ‘financial crime’ concerns. In some cases lenders are legally prevented from telling customers why they have been ‘debanked’.
Tougher anti-money laundering rules were introduced after the 2008 financial crisis to make banks safer.
But the Institute of Economic Affairs estimates that enforcing them cost banks £34billion a year – almost double the budget for policing across the UK – despite no evidence that the measures cut crime.
Although PEPs are subject to extra checks, the FCA said banks should not disadvantage people running for office or taking senior roles.
‘Public service naturally comes with greater scrutiny but it must be proportionate,’ said Sarah Pritchard, the FCA executive director of markets. ‘Most firms try to get it right but there is more they can do.’
A ‘small number’ of the 15 firms reviewed by the FCA face further scrutiny ‘to ensure they make changes,’ it said. Publication of the report was delayed because of the General Election.
Last night the FCA was accused of issuing its findings while Farage is attending the US Republican convention.
It was ‘notable’ that the report was released when ‘Farage is ill-placed to respond,’ said Andy Agathangelou, the founder of campaign group Transparency Task Force, adding: ‘It is almost as if the timing was hand-picked to reduce the probability of being challenged.’
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