Sarah Pritchard says the FCA will act if «banks and other companies are more ticking than risky»; Photo: Financial Conduct Authority
Banks that mistakenly refuse to open accounts for politicians and their families risk being fined, financial watchdog warns.
The Financial Conduct Authority (FCA) is reviewing how banks treat politicians amid claims some have attempted to open accounts or faced unusually detailed scrutiny.
In an article for The Telegraph, Sarah Pritchard, chief executive of the Financial Conduct Authority (FCA), vows the regulator is ready to «act» if banks treat politicians unfairly.
Ms. Pritchard argues that this is correct and legal. requiring financial institutions to carry out additional due diligence on so-called “politically exposed persons” or politically exposed persons.
However, she cautions that such procedures “should not feel like the financial equivalent of someone going through your trash can.”
Ms Pritchard writes: “If we find that banks and other companies are more tick-driven than risk-driven, we will act. Because proportionate additional financial control should not make participation in public life more difficult than necessary.”
The FCA has a range of options in such scenarios, including ordering firms to make changes to their policies. and enforcement action, including fines.
Ms. Pritchard's article is the first article written by FCA management since the debanking scandal.
«Necessary and proportionate»
Nigel Farage, former the leader of UKIP, lost his Coutts account, only to be later discovered, due to the issuance of domestic banknotes, that his political views played a role in the decisions.
Dame Alison Rose stepped down as CEO of Natwest, which owns Coutts, due to the backlash. Peter Flavel has also stepped down as CEO of Coutts.
FCA is working on two reviews. The first is about how PEPs are treated (this was before the Farage case) and the second looks at the scope of the overall problem of debanking.
The FCA has been criticized by some for its role in shaping the banking culture, which has led to high-profile examples of debanking .
On Tuesday, the regulator released details of the PEP review. Ms Pritchard, who in her capacity oversees the banking sector, will also give a speech on Wednesday.
Ms Pritchard writes in her Telegraph op-ed: “It is necessary and proportionate for banks to seek additional information from those in power , for example, about the sources of wealth and financial connections.”
“But the appropriate level of investigation should not feel like the financial equivalent of someone rummaging through your trash can. We have heard that this is often the case, especially with the families of political figures.»
She later adds: «We are committed and determined to create a system that properly protects against risks, keeps our system clean and meets our international obligations, but does so proportionately so that the credible are not denied access to financial resources.” products and services necessary for everyday life.”
«We want our financial and political system to be clean and free from corruption.»
Sarah Pritchard
I want to encourage others to join me as a public servant — be it a regulator, a civil servant, in the armed forces or in parliament.
Service is a privilege. But, despite all the advantages, it cannot be denied that the work of a high-ranking civil servant is associated with additional, although quite reasonable, difficulties.
The decisions we make have a huge impact on the lives of others. Therefore, it is understandable that we should be subject to more careful control of our finances. The public needs to be sure that we are making decisions for the right reasons. We want our financial and political system to be clean and free from corruption.
The UK is one of over 200 countries and jurisdictions that have signed up for additional financial due diligence on senior public figures known as PEPs. Here, Parliament has written these standards into law.
In response to these requirements, banks need to and proportionately ask those in power for additional information, such as sources of wealth and financial connections. But an appropriate level of investigation shouldn't feel like the financial equivalent of someone rummaging through your trash. We have heard that this is often the case, especially with the families of political figures.
Combating financial crime is a central part of FCA's strategy. We have acted, including through criminal prosecution, against those who do not meet the international standards that we support. We have secured the first criminal conviction of a bank for non-compliance with anti-money laundering standards. Our work has resulted in more than £1 billion in fines paid out since 2010.
And in my keynote on Wednesday, I'll explore how we're using data to better identify those who are abusing our services. financial system for criminal purposes.
For example, to ensure that companies implement strong controls, we developed an automated tool to test companies' ability to identify those who are sanctioned and take targeted action where we see weaknesses. places.
The reaction to this check from the regulatory authorities. However, banks and other financial institutions should not take a general approach to risk.
Since 2017, we have been publishing recommendations on how financial companies should treat high-profile public figures. It says that banks and other organizations must act proportionately, paying more attention to those who pose the greatest threat. And it was clear to us that public figures in the UK should generally be considered low-risk people. Individuals can also report concerns to their financial institution or to the Financial Ombudsman Service, which can investigate complaints of disproportionate treatment.
We have also listened to the concerns of those who believe that banks and other companies are too risk averse by providing compliance with legal requirements with a broadsword, not a scalpel. That is why Parliament has asked us to analyze how UK PEPs are treated under the current legal regime.
We asked those affected what impact it had and are posting more details on what our review is. will cover. Areas of scrutiny will include how firms apply the PEP definition to individuals and check whether companies are proportionate in their risk assessments of UK PEPs.
We are committed to this and we achieve this. are determined to achieve a system that adequately protects against risks, keeps our system clean and in line with our international obligations, but does so proportionately so that the trustworthy are not denied access to the financial products and services necessary for everyday life.
If we find that banks and other organizations are more tick-driven than risk-driven, we will act. Because proportionate additional financial controls should not make it harder to participate in public life than it needs to be.
Sarah Pritchard is Executive Director of the Financial Conduct Authority
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