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The UK’s top financial watchdog has asked MPs and peers whether they have faced challenges with banking services, one week after it launched a separate probe into “de-banking” in the wake of the Nigel Farage scandal.
The letter from the Financial Conduct Authority, sent on Monday evening, marks the start of an investigation into rules around banking high-risk customers.
“We are reviewing how financial services firms have applied the politically exposed persons (Pep) regime and whether any changes are needed for UK Peps,” said the FCA. “We are keen to hear directly from UK Peps on their experiences, including any problems they have encountered.”
The review into the regime around Peps, individuals subject to greater scrutiny because they are seen as at higher risk of corruption, which could include politicians as well as their relatives, is part of the Financial Services and Markets Act, which received royal assent at the end of June.
Rules on Peps were previously updated in 2017. The terms of reference for the review will be published in September, with a full report on the subject due next June.
The regulator has written to MPs, peers and the chairs of parties polling at more than 5 per cent, and is also looking to engage with other Peps, including senior civil servants and high-ranking members of the armed forces.
The issue of Peps has been thrust into the limelight after the de-banking scandal last month involving Farage, the former UK Independence party leader. After revealing that private bank Coutts had closed his business and personal accounts, Farage secured a memo showing that a central reason for the decision was that his political views did “not align” with those of the bank.
The disclosure forced the resignations of Coutts chief executive Peter Flavel and Alison Rose, head of Coutts’ owner NatWest. She stepped down after admitting giving an inaccurate briefing to a BBC journalist about the reason Farage’s accounts had been closed.
Other politicians have also said they have struggled to secure banking services, which they blamed on overly onerous rules. In July, chancellor Jeremy Hunt told the Financial Times that online bank Monzo had refused to let him open an account last year.
The review into Peps is separate to the request for information sent by the FCA to more than 25 lenders last week, asking the reasons why they terminated, suspended or denied services to customers. Banks and building societies must respond by August 25, with the FCA planning to publish its findings by mid-September.
Earlier this month, Hunt told the regulator to establish urgently how many customers had been blacklisted as a result of their political views, adding that “a threat to be de-banked is a threat to your right to express your opinions”.