Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department is taking steps to ensure that (a) banks and (b) other financial institutions cannot refuse to provide financial services on the basis of a person's status as a politically exposed person.

The Government’s position is clear that financial institutions must not deny services to customers who are Politically Exposed Persons (PEPs) solely on the basis of their PEP status, nor on the basis of their political beliefs.

The Financial Services and Markets Act 2023 commits the Financial Conduct Authority (FCA) to conduct a review into financial institutions’ adherence to their guidance on PEPs, and the appropriateness of that guidance, within twelve months of Royal Assent. This review will assess the compliance of FCA-regulated firms with their legal and regulatory obligations regarding the risk management and treatment of PEPs, as well as their relatives and known close associates, and the FCA will take action where it identifies serious failures. The FCA has contacted domestic PEPs seeking their input regarding their own treatment by financial institutions, and will publish the terms of reference for its review in September.

The Government has also taken action through the Financial Services and Markets Act to commit the Treasury to amend the Money Laundering Regulations to distinguish explicitly between domestic and non-domestic PEPs in law. This amendment will make clear that, in the absence of other high-risk factors, domestic PEPs must be treated as lower risk than non-domestic PEPs and have a lesser degree of enhanced due diligence applied to them.

Separately, there are existing regulations - specifically Regulation 18 of the Payment Accounts Regulations 2015 – which already require banks not to discriminate against any UK consumers based on their political opinions when accessing a payment account. The Chancellor has written to the FCA to request an urgent review into the matter of ‘de-banking’ more broadly. The FCA has agreed to undertake this review, and to share the evidence and findings with the Treasury.