UK regulator calls on firms to improve treatment of politically exposed persons

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LONDON (Reuters) – Britain’s Financial Conduct Authority has told banks, payment firms and lenders to do more to ensure parliamentarians, senior public servants and their families are not treated unfairly, the watchdog said in a statement on Thursday.

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

“That requires a balancing act. Most firms try to get it right but there is more they can do. We’re following up with those firms that were getting the balance wrong to ensure they make changes.”

Last year Alison Rose stepped down as the CEO of lender NatWest after admitting to a “serious error of judgment” in discussing politician Nigel Farage’s relationship with the bank with a BBC journalist.

The episode prompted a major review of how financial firms treated so-called politically exposed persons (PEPs), amid concerns some individuals were being denied accounts or other services on the basis of political views.

The FCA said it had found most firms did not subject PEPs to excessive or disproportionate checks but it is proposing changes to its guidance, to guard against possible mistreatment of PEPs in the future.

The regulator is consulting the industry on whether UK-based PEPs should qualify for a lower risk status and also on the introduction of special protections for non-executive members of the civil service, who should not be defined as PEPs solely for that reason, the FCA said.

The consultation will close on October 18 but the FCA urged firms where possible improvements had been identified to act before final updated guidance is published.