The Financial Conduct Authority (FCA) recently urged financial firms to ensure that parliamentarians, senior public servants, and their families are not unfairly treated. Here’s what you need to know.

Key Points

• Legislation: Firms must perform extra checks on politically exposed persons (PEPs) as per international standards.
• FCA Review: Most firms do not subject PEPs to excessive checks, but improvements are needed.
• Actionable Steps:
  • Define PEPs, family members, and associates strictly by law.
  • Promptly review the PEP status once they leave office.
  • Clearly communicate reasons for actions to PEPs.
  • Assess actual risk posed and ensure information requests match these risks.
  • Improve staff training on dealing with PEPs.

Recent Updates

Since January 2024, UK PEPs are considered lower risk compared to foreign PEPs. Some firms have already started making improvements.

FCA’s Proposals

• Treat UK PEPs as lower risk.
• Non-executive civil servants should not be treated as PEPs solely for their position.
• More flexibility in approving PEP relationships within firms.

The FCA stresses that firms should not wait for updated guidance and must implement necessary changes now. Continuous monitoring will ensure firms comply.

If PEPs are dissatisfied, they can complain directly to the firm or the Financial Ombudsman Service. Some firms have dedicated contacts for PEPs.