Financial Firms Must Improve Treatment of Politicians

The United Kingdom’s Financial Conduct Authority (FCA) is looking to change its guidance to ensure that financial firms do not treat politicians and public servants unfairly.

The FCA released proposed amendments to its guidance relating to politically exposed persons (PEPs) on Thursday (July 18) and invited public feedback on the changes to be submitted by Oct. 18, the regulator said in a Thursday press release.

“Public service naturally comes with greater scrutiny,” Sarah Pritchard, executive director of markets and international at the FCA, said in the release. “But it must be proportionate and shouldn’t disadvantage people running for office or taking senior public roles, or their families. That requires a balancing act.”

The FCA’s proposed changes say that U.K. PEPs should be treated as lower risk than foreign PEPs, that non-executive board members of civil service departments should not be treated as PEPs, and that there should be greater flexibility in who can approve PEP relationships within firms, according to the release.

The regulator added in the release that firms should immediately implement improvements that have been identified, that it will monitor how firms handle PEPs, and that PEPs who are unhappy with their experience with a firm should complain to the firm and to the Financial Ombudsman Service.

The FCA said that it reviewed how firms treat PEPs and found that while most firms did not subject PEPs to excessive or disproportionate checks, all firms could improve.

“We have heard directly from some parliamentarians about the problems they and their families have faced,” Pritchard said in the release. “We have been clear where we expect firms to make improvements, including in how they communicate with their customers.”

The FCA’s proposed amendments come about a year after the U.K.’s economic and finance ministry, HM Treasury, proposed rules for banks to combat “unfair bank account closures.”

“The government has stepped in to address fears that banks are terminating accounts because they disagree with someone’s political beliefs,” the ministry said at the time in a press release.

In July 2023, the U.K. saw a controversy over the “debanking” of politician Nigel Farage, which led to the resignation of NatWest CEO Alison Rose.