iD proof shown LOCALLY for distant building societies+

MSE readers are invited to vote, in this thread, for or against the following proposal. I aim (with your help) to develop this into an articulate, simply understood, case for putting to Parliament + wherever necessary on the way (Financial Services Authority, etc). Perhaps interested MSE readers can lobby their local MP, for starters.

1st draft :

Banks and building societies are required to counter money-laundering by obtaining proof of identity and proof of home address for all of their customers. Many financial institutions require the customer to show in-branch, or submit via post, an original document to prove iD (eg Passport, Driving Licence, Birth Certificate), plus an original document confirming the customer's residential address (eg utility bill or bank statement). This is a moderate inconvenience for people able to visit a branch.

It is a gross security risk of identity theft for people having to entrust such documents in the post where theft is rife. The Home Office has given Royal Mail new powers to vet employees after a dramatic increase in fraudster workers who penetrate sorting offices to steal cheque books, credit cards, ATM cards, and documents or copies of documents that prove iD and address. According to banking trade body the Association for Payment Clearing Services, the number of cards intercepted in the post rose by 62 per cent in 2004, netting more than £73 million spent on cards that never reached their rightful owners. According to Royal Mail, postal workers collectively stole 94,000 items between April 2003 and March 2004.

Some banks and building societies propose customers, instead of supplying original documents can supply photocopies certified by a professional person (eg solicitor, accountant, doctor, etc) who must include their contact telephone number, but the customer is likely to incur a fee for each certification. Identity theft remains a risk if such photocopies are stolen in the post, because vital data is included (customer's full name, address, signature, date of birth, mother's maiden name, etc).

I/we propose our Government make an arrangement with the four major high street banks, paid for from central funds, for creation of a LIP department, for Local Identity Proof. People can visit any high street branch of Barclays, Lloyds, HSBC or NatWest to show original documents proving identity and home address. Highly vetted, qualified staff photocopy and authenticate the documents, and forward them securely (possibly via online encrypted method) to the required distantly located building society or bank. This enables the customer to save or borrow with that financial institution.

Regular, monthly savings accounts have for several years been the highest paying moderate-term savings products on the market. For example, Derbyshire Building Society has paid 1.10% gross above Base Rate since summer 2004 for their Regular Savings account. The British public need to be encouraged and enabled to save (for home-buying, retirement, etc). However, postal submission of iD and address proof is currently essential to save with institutions located in Derbyshire or numerous other areas of the UK.

It is unfair for building society members collectively, and indeed the banks, to continue paying for staff time, plus compensation for postal thefts, under the current anti money-laundering arrangements. Moderate funding from central government to the big four high street banks to create LIP departments seems the sensible, prudent and fair way forward.

Failing this, it is crucial for building societies and banks to be legally required to use a secure method to convey original (or photocopy) documents back to customers. Currently, most institutions use normal post. Customers submitting such items to institutions should also not have to pay for secure postal supply.

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MSE readers : please vote 'For' or 'Against' the idea of LIP departments for the 4 major high street banks. Ideas for improving the facts or wording will be much appreciated.

Also an action-plan is being drafted for the order in which the working draft of the above should be sent, seeking ideas for improvement - perhaps :

1st) managing director(?) of each of the 4 major high street banks
2nd) manager of each building society
3rd) managing director(?) of each non-major bank
4th) chairman of Association of Building Societies
5th) chairman of Association of British Banking
6th) Financial Services Authority
7th) Banking Ombudsman

+ final version subsequently to :

1st) local MP of each interested MSE reader
2nd) Minister of Fiscal Studies(?)
3rd) The Treasury
4th) Chancellor of the Exchequer
5th) media (Telegraph, Guardian, BBC Radio 2 Jeremy Vine Show, ITV, etc)