Online Challenger Banks

Lord Vaizey of Didcot Excerpts

Monday 27th April 2026 Lords Chamber

[Lord Livermore (Lab)]

Yes, they would be required to do so.

[Lord Vaizey of Didcot (Con)]

My Lords, the anti-money laundering regulations are imposed on people who are politically exposed without any nuance whatever, and not in accordance with the legislation or regulations, which require banks to assess people on a case-by-case basis—nor are customers told why they are being refused. There appears to be no mechanism for any kind of appeal or redress. Will the Minister talk with the FCA and the numerous ombudsmen who appear to work on this area and at least allow customers to talk to a human being rather than a computer that is programmed to say no in all circumstances?

[Lord Livermore (Lab)]

I fully recognise and understand many of the things the noble Lord says. I understand that being a politically exposed person means enhanced scrutiny and administrative burdens and has impacted many noble Lords. Banks and other regulated firms must apply additional checks to customers who meet the definition of a politically exposed person, as well as to their relatives and close associates. That is to mitigate the increased risk that they are targeted for bribery and corruption attempts. While those checks are important, it is essential that they are proportionate to the risks posed; checks should account for the nature of the proposed business relationship and the potential for the product to be misused.

The noble Lord will know that changes to the money laundering regulations now require banks to treat domestic politically exposed persons as inherently lower risk and, in the absence of any other high-risk factors, banks should apply due diligence measures proportionately. In July 2024, the FCA also published its review of the treatment of politically exposed persons, which identified a range of required improvements by the firms that it assessed.