EU laws which banks have been accused of using to close customers’ accounts over their political views are expected to be scrapped under plans being considered by ministers.
Treasury officials have ordered the City watchdog to urgently review rules around “politically exposed persons” (PEPs) after several public figures, including Nigel Farage, complained that their accounts had been shut without warning.
The measures, passed into UK law under a Brussels regulation that means financial institutions have to perform “enhanced” checks on people in public life, have fuelled concerns that banks are curbing free speech.
Jeremy Hunt, the Chancellor, and Kemi Badenoch, the Business Secretary, are both thought to be sympathetic to the need to amend such EU regulations.
Mr Farage said he had been denied accountswith nine banks and urged the Government to take advantage of Britain having left the EU to scrap the current system and end the “injustice” faced by public figures.
He has said that the closure of his account and other banks refusing to take him on as a customer was “serious political persecution” and suggested it was “corporate prejudice” linked to his campaigning for Brexit.
“What is happening to me and so many others is a direct result of EU laws that have been incorporated into the UK rulebook,” he said. “Add to that Britain’s obsession with gold-plating EU regulation and that is how this injustice has been allowed to come about.
“If only our Government had pursued the Brexit freedoms available. It still could and should do the right thing here and repeal this law.”
Andrew Griffith, the Economic Secretary to the Treasury, has written to the Financial Conduct Authority asking it to speed up a review of the rules.
“Given the strength of concern on this issue, I would expect that the FCA will prioritise this important review over the coming months, and if there are ‘easy wins’ along the way will implement those expeditiously,” he said.
The rules cover politicians, diplomats, generals and even royals and often involve combing not only their financial affairs but also those of their extended families. Such PEPs are subjected to “enhanced due diligence” checks by banks to make sure they are not involved in money laundering, blackmail or corruption.
Lord Moylan, a Tory peer, added: “Now we’ve left the EU we could revert to the proper international standards by introducing a distinction between domestic and foreign PEPs. But we’ve got resistance from our own civil servants and ministers are going along with it.”
Sir Charles Walker, a senior Tory MP who has campaigned on the issue, urged the Government to enforce existing powers to sanction misbehaving banks. “We have often complained about the EU gold plating its own legislation, but on this occasion it’s the banks doing the gold plating and seemingly turning their face on the protections for customers,” he said.
“The banks can behave as they are because they have access to a virtually bottomless pit of money to defend themselves against any claim brought by a de-banked customer.”
Claire Coutinho, children’s minister, said it was “completely unacceptable for a bank to close an account because they don’t like the opinions of the individuals”.
The measures derive from international standards but were strengthened by the EU and passed into UK law via the bloc’s anti-money laundering directive.
Brussels removed the distinction between domestic PEPs, who are typically lower risk, and those who come from other countries. Ministers have acknowledged that the EU regulation “goes beyond” international obligations.