Some tip-offs are so awful that you almost hope they are untrue. When I was told by Geoff Robbins, a computer consultant, that he had been asked about his political connections before opening an account with the state-controlled Royal Bank of Scotland it sounded fantastical. Having the state owning the UK banking system is bad enough, but asking about party membership before you open an account? Not in Britain, I thought. And indeed, the RBS press office denied it outright. "We would not ask that question, nor dream of doing so," said an RBS spokeswoman. So had Robbins concocted his story? I doubted it. So I called RBS Streamline myself and pretend to set up an account for credit card processing facility. I used the details of my mother-in-law's real company and when they started to talk politics, I switched on the tape recorder. Here is the audio, the transcript is below.
FN: Could you repeat the exact question again?
RBS: Is she a member of any political party, basically? (note: he was referring to my mother-in-law)
RBS: [He says a supervisor will call me back, as one of the company directors lives abroad]
RBS: It is put upon us by the Financial Services Authority to try and omit any money laundering and things like that. It helps us crack down on fraudulent merchants by asking these types of questions.
FN: But I don’t understand why, say, if she is a member of the Conservative Party or Labour Party, that is related to fraud?
RBS These are questions thrust upon us by the Financial Services Authority, sir. It would be the same no matter where you apply for merchant services, the same question would be asked. It is legally binding. It’s to try and omit any fraudulent activity. I presume the reason why we ask that question is because there is a high volume of fraud in that sector. Where people who are of that sort of nature maybe are inclined to commit fraud. I’m not for a minute implying that she will do. But that’s just trying to protect us and you, as well, you see.
Last night, RBS acknowledged that their staff has been asking about political affiliation after all. Their statement:-
"As part of our implementation of FSA guidelines around Anti-Money Laundering activities, we introduced questions on Politically Exposed Persons as part of our account opening procedures. This has meant that staff in some instances have been asked to enquire about whether someone is a Politically Exposed Person. Unfortunately, they have asked the question of political affiliation instead. We have taken all necessary steps to ensure that our customers teams are aware of the difference and will change practices with immediate effect. This issue will also be highlighted in our ongoing staff training programmes on this important topic."
This raises a whole raft of new questions, including: what on earth is a Politically Exposed Person? I spoke to the FSA this morning, when I was told that it mainly means - for example -a member of government from a country on the international corruption list.
So the questions I'd like answers to are as follows:-
1) How many people have been asked by RBS about their political affiliation?
I realise that many CoffeeHouses will argue that this will be no big deal - it was RBS misinterpreting some guideline. But to me, the idea of a state-owned bank asking about political party membership has a deeply sinister resonance. What really brought it home to me is that my mother-in-law, whose politics RBS was asking about, fled Soviet-run Czechoslovakia in 1968 to raise a family in countries where questions like these were not asked.
UPDATE: Just to be clear, I agree with the Coffee Housers who say this is cock-up and not conspiracy. But the FSA say this Politically Exposed Person (PEP) is simply part of anti-fraud toolkit (it has been for years, apparently) so there is no requirement to ask it of every new client. RBS took it upon itself to pose this question, around the time of its state ownership. I'm sure the timing was also a coincidence. I accept it was a blunder, magnified by the attempts of its baffled call center staff to interpret the question. But whatever the explanation, whether it be accident or design, consider the end result: we have a state-owned bank asking clients if they are "politically exposed". And that just won't do.