The Financial Conduct Authority has told financial firms to do more to ensure parliamentarians, senior public servants and their families are not treated unfairly.

Under legislation adopted by parliament, financial firms are required to carry out extra checks on so-called politically exposed persons, or PEPs, and there have been concerns about how firms in the UK are meeting these requirements.

Most firms reviewed by the watchdog against global standards set by the international Financial Action Task Force were not in fact found to have subjected PEPs to excessive or disproportionate checks, and none would deny them an account based on their status. That said, the watchdog considers that all firms could improve by ensuring that their definition of a PEP, family member or close associate is tightened to the minimum required by law and not go beyond that.

Firms have also been told to review the status of PEPs and their associates promptly once they leave public office; to communicate to PEPs effectively and in line with the Consumer Duty, explaining the reasons for their actions where possible; to effectively consider the actual level of risk posed by the customer, and ensure that information requests are proportionate to those risks. Improved training offered to staff who deal with PEPs has also been suggested.

Sarah Pritchard, the FCA’s executive director of markets and international, commented: “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. 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.

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


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