New request for personal info from Selftrade

Plumeria_Obtusa

Lotus43P wrote: »

I have sent off an email to Moneybox asking Mr Lewis to look into this matter

Me too. I seem to remember some time back MoneyBox attacked some banks for impertinently asking customers, making large cash withdrawals, what they were going to do with the cash. There seem distinct similarities with what we are being asked for here.

Nicholas-bloody-Parsons

Plumeria_Obtusa wrote: »

I have sent off an email to Moneybox asking Mr Lewis to look into this matter.

Now Ive got a threatening email from Selftrade! Saying that I will not be able to withdraw money or execute trades unless the form is received promptly ! I only received the paper form one working day ago.....

I cannot believe they will get any new business, if new customers are expected to complete this hugely intrusive long winded form.

It may take selftrade to suspend customer's accounts before Paul Lewis and the BBC take this up.

Radio 4's moneybox can be contacted via moneybox@bbc.co.uk

lyndylu

I've also received this form and I was initially planning to complain to the FCA, however, after reading the discussions on the Motley Fool website I believe this would be a waste of time. My understanding is that the money laundering regulations require brokers to verify the identity of their customers and the legitimacy of their funds but don't specify exactly what information the brokers should collect, it's left to the discretion of the individual brokers.

As far as I can tell Selftrade are using the need to comply with regulation as an opportunity to gather much more personal and financial information than they require. The fact that they're accompanying demands for information to which they are not entitled with threats is disgusting.

I have contacted a number of newspapers, Which? and BBC Moneybox about this and have received a very encouraging response. Hopefully there will be some damaging press coverage of this very soon.

In the meantime my approach is to provide as little information as possible (essentially what they already know) on the basis that they won't want the inconvenience and cost of hassling me for further information unless they genuinely need it to comply with the regulations.

AngelaD

I and my OH received forms a couple of weeks ago - dated 8th April. I have been reading this & Motley Fool forums before deciding what to do. Today we have received another letter (dated 17th Apr) saying they haven't received a reply and enclosing further forms to complete. The latest forms are not quite so intrusive as previously - no question about inheritance, and the one asking us to describe the expertise etc..has gone too. Our accountant agreed with me that some of the questions are nigh on impossible to answer without going into great detail - and it's none of their (ST's) business anyway! I think I'm going to complete the latest forms as vaguely as possible. I've thought about transferring our business to another company, but as a relative novice to share dealing, I'm thinking it's too much hassle.

dougz_2

Article in FT about this today http://www.ft.com/cms/s/0/f919cace-ca12-11e3-ac05-00144feabdc0.html#axzz2zejlL9o5

FT: Similar details are, however, requested by other platforms in respect of new account openings. They are likewise required to satisfy themselves – under what is often referred to as “KYC” or “know your customer” rules – that customer funds were generated legitimately. Anti-money laundering rules have been repeatedly strengthened in order to clamp down on tax avoidance, organised crime and terrorism.

Really? What "other platforms" have organized such intrusive interrogation of all their customers? ...Yet... Maybe the customers who stuck with the Selftrade zombie platform are being used as guinea-pigs, to test out an expansion of this to include ALL uk citizens?

Spruance

I also have the form, which actually arrived before Easter but I hadn't opened it as I had presumed (from timing of arrival) it to be a Tax Certificate for the prior financial year and was going to look at it later. Today I have received a snotty email from Selftrade warning against the consequences of non-compliance.

This is all very odd as Selftrade are usually very good at flagging up important future events. Normally I tend to get inbox alerts at least a week prior to significant events so it is surprising to be told nothing and then find that the only secure inbox message is a 'chaser'.

Including the Comdirect and Squaregain years I have been a customer of Selftrade since July 2003 having (perhaps now ironically) switched from TG Waterhouse owing to their overly bureaucratic procedures (in my opinion).

I find it very odd that Selftrade are asking me to provide my contact info and National Insurance number as they already have that information. The very fact that I am looking at their form proves that they know my current address!

As others have alluded to they are also asking about my 'Anticipated Trading account activity' Well Selftrade, I don't even know that myself so how can I tell you? I am only an occasional trader and tend only to buy stocks (mainly in my ISA) that I have a 'good feeling' about, and even then only having done days of prior research.

This all seems to me like (if I may quote Monty Python) some sort of Spanish Inquisition. What a way to treat customers.

The form itself has a quasi-official look to it but as I cannot find any reference to this requirement on the Financial Conduct Authority website, so maybe the form layout is Selftrade's own invention. Whatever the source it could hardly be regarded as user friendly.

Anyway, I have completed the form to the best of my ability but have added a number of explanatory comments so will no doubt get a black mark for writing outside of the boxes. As far as I can see, none of my answers require me to send any supporting documents but I see further problems ahead if asked to produce original utility bills or photo ID, as I am on online billing, have never travelled abroad, so no passport and don't even have a photocard driving licence as last time I renewed (at last house move) these weren't compulsory.

I hope that I am unnecessarily fearing the worst but if push comes to shove I suspect that Selftrade will be minus one (further) customer.

Nipper_55

Selftrade seemed to have been panicked into doing something quickly to appease HMRC.
I believe that most of us received the original form F102B 0314. This was very intrusive and according to a friend of mine ( HMRC customs employee )should need only go to a customer that S/T suspect of money laundering.
I have now received a toned down version F102C 0414. Pretty intrusive but not quite so bad.

It is a worry as it would seem that S/T might be in a financial mess as well. If you Google ' Nominee Accounts . How safe are they ' you will see that they are not safe as the pooled shares could be sold and the proceeds used to pay off '1st Call Creditors '. We would receive up to £50000 only of our loss.

Mainly this money laundering problem is a combination of EC and HMRC. Look on Google ' HMRC Anti-Money Laundering Guidance for Money Service Businesses'
You will see that S/T and the others have instructions to spy on us and under the threat of severe penalty have to tell them of anything they think we are doing that may be suspicious. The word Gestapo and the former East German Statzi spring to mind. All politicians that have allowed this to happen are a disgrace

Roadsweeper2

Thanks to everyone who have commented before me. I also have received a message box reminder from Selftrade 3 days after I received the letter. I have sent Selftrade a message box reply in which I queried the necessity to confirm my identity after many years as a customer. I also pointed out to them that it is obvious that my small limited share trading is not money laundering.
I hope everyone sends a message to Selftrade questioning the form, which can not possibly identify any money laundering activity.

bowlhead99

Nipper_55 wrote: »

Selftrade seemed to have been panicked into doing something quickly to appease HMRC.

Presumably, the FCA/PRA (i.e. their regulator rather than HMRC).

They are currently closed to new businesses while they refine their processes and procedures so one assumes that they have had a visit from the regulator (or are anticipating one) and need to make sure they have carried out the right level of diligence on their clients which they don't currently feel they have. Or their parent company is requiring them to get their house in order for the same reason.

You can't conduct financial services business without complying with the money laundering rules and one presumes they have been a little knee-jerk-y or OTT in trying to get their house in order as it will cost them money to have their doors closed to new business. Even if people are annoyed and leave it is better to have a smaller, compliant, business than a closed down business.

I believe that most of us received the original form F102B 0314. This was very intrusive and according to a friend of mine ( HMRC customs employee )should need only go to a customer that S/T suspect of money laundering.
I have now received a toned down version F102C 0414. Pretty intrusive but not quite so bad.

It's unlikely they would have a form designated for people they suspect to be launderers. For one, a special form would perhaps tip off the launderers which is in itself a crime. So, the documents would be standardised.

However, it's true that financial service businesses should differentiate between higher and lower risk accounts and typically would ask for more info on source of funds, source of wealth etc with higher risk customers whose background is perhaps in certain overseas jurisdictions, politically exposed people, etc.

Unfortunately if your records are weak and you literally don't know your customers other than their name and address, you would find it difficult to determine a risk classification, and so perhaps they sent the 'full' questionnaires out to all and have since sent you the 'right' one dated April as a result of client pushback or other internal review.

It is perfectly legitimate that S/T and others can ask questions like 'what's the intended purpose of the account' 'roughly what value of deposits might be made each year' and 'over what term do you intend to invest'. The new account opening form at TD Direct, as a random example of another reputable broker, asks all these questions, plus 'what volume of trading is anticipated monthly'.

If you are running a regulated financial services business, you have to help avoid financial crime under the various anti-money laundering and countering the financing of terrorism rules. This is the same in London as it is in Paris or Frankfurt or Jersey or Cayman - you have an obligation to report suspicious transactions.

If due to some historic problem of having lost data about how the account is intended to be used by the client, or if you had never asked for it in the first place, you would not be in a position to say that John Smith's deposits of £x one month, buy and sell one stock and immediately and withdraw £y back to a different bank account was 'unusual', because you don't know what your basic expectation is for how the account was going to be used or how much money would be likely to move in or out of it. By law, they should have asked and got it on file so they can build a monitoring system around it.

Plus, as a side note, if you said the purpose of the account was 'inheritance and pension planning' and started to invest into some funds, then after a few months you randomly made some risky trades, changed your bank account details and started pulling money out willy nilly there is perhaps a customer service / customer protection point that means the 'expectations' on file will help them identify that something unusual is going on and alert you to potentially fraudulent activity on your account.

It seems that in this case, most people here (and on the threads at the Fool website) are most upset about the questions that ask them about their rough wealth and source of wealth. Again this is a legitimate thing to ask for AML purposes. You want to give me, perhaps large sums of money which I invest for you or hold for you and then give back. It is par for the course these days that I should be able to ask where that has come from.

On the form at rival TD DI, they only have two relatively small boxes for you to fill in -"What is the source of funds/wealth to be invested in the account?" ; "How are the funds to be paid into the account e.g. Cheque, CHAPS?". The selftrade one is longer (but as you mention, the 04/14 form is not as long as the 03/14 one) but essentially you're just saying my net worth is in the £0.2-0.5m range, or the <£0.1m range, or the £1m+ range or whatever - and then saying I've acquired this over 20 years employment and a bit has come from saving and investing.

I agree it's intrusive to ask for something that looks more like a full CV (which I presume the revised, shorter form doesn't do) but effectively they have geared it up for a higher risk investor so they don't need to go and ask for more later which would really p155 you off, and in the meantime the regulator is satisfied that they know their customer even if they have been more heavy handed than might have been necessary.

Seems like Selftrade have a customer backlash to contain, but the regulator would not be happy to break its own rules for Selftrade and just say, well it looks like you missed an opportunity to ask someone for ID or background info when they signed up in 2006, so you might have been helping invest the proceeds of crime, but it might annoy your customers to ask them for any personal info so we will let you off finding out who they are, just ignore my rules.

It is a worry as it would seem that S/T might be in a financial mess as well.

Reduced number of new customer accounts would be a worry if you were their parent company (ultimately owned by Societe Generale - the $50bn banking giant). But it doesn't mean your money is suddenly less safe.

According to a presentation by the French parent company, despite a reduction of new accounts and the industry reporting a lower overall number of trades on LSE from 2012 to 2013, they increased the number of trades by a percent or so - they do over 200k a month. However net banking income was down some €5m due to regulatory constraints on the management of client money deposits which hurt their net interest margin. Apparently they have also now written off a bunch of goodwill and intangible assets and had a large expenditure to improve operational performance, but do not see a bigger net profit next year.

I suppose I would prefer to be invested via a strong company than a weak one but if they make too much money we would all moan that the fees are too high...

If you Google ' Nominee Accounts . How safe are they ' you will see that they are not safe as the pooled shares could be sold and the proceeds used to pay off '1st Call Creditors '. We would receive up to £50000 only of our loss.

What you've found on the internet is referring to a problem of serious fraud or negligence; assets are ring-fenced for clients in the nominee account (so the company can't spend them) but if it is a pooled nominee account like most brokers offer, there could be a problem if there is supposed to be your 100k and nine other peoples 100k of assets in the account but when they add it up they can only find 950k of assets.

In that case they can only give you your prorata share of 95k and you lose 5k. However, you get protection for the first 50k of your losses. So in such a case you would be OK- presuming you are holding UK shares/funds and not more exotic foreign stuff.

But as mentioned, this is same with other brokers.

Mainly this money laundering problem is a combination of EC and HMRC. Look on Google ' HMRC Anti-Money Laundering Guidance for Money Service Businesses'.

To be picky a stockbroker is not a money service business it falls under another classification. But yes you are on the right lines, that their customer onboarding/ monitoring processes are driven by money laundering regs which are driven by core principles agreed internationally then implemented through EU directives and ultimately local laws and regulations.

You will see that S/T and the others have instructions to spy on us and under the threat of severe penalty have to tell them of anything they think we are doing that may be suspicious.

That is true. In modern society you cannot operate a reputable and regulated financial services business moving money and assets around people electronically without alerting the authorities to something you feel is suspicious. You cannot operate accounts for persons you have not identified.

An employee sees something that they think may be regarded as suspicious. They report it to their head of compliance, to avoid later being charged with brushing it under the carpet and assisting a money launderer. The senior person looks into it and considers whether to report to the police, again for the same reason. If they do, the police consider whether to take action. Even if they take no action it may be useful if they collect information because they might get suspicion reports from various sources which cumulatively add up to something.

The word Gestapo and the former East German Statzi spring to mind. All politicians that have allowed this to happen are a disgrace

While Selftrade's approach might seem OTT, the idea that it is disgraceful that businesses established to enable moving peoples cash and assets about, are allowed to ask questions, is ridiculous.

Do you always say yes when a guy at the airport asks you to please take my package to Columbia? Probably not if you don't know who he is.

Do you think it's terrible that world governments can fine banks for lax procedures enabling Iraqui businesses to avoid sanctions and fund alleged terrorism? Probably not.

So, you should probably approve of the laws enabling financial services businesses to ask questions of customers or potential customers. And not allow them to say "sorry, we've been naughty in the past but will now do the absolute barest minimum possible to comply, we don't want to do anything more than that in case we offend someone sensitive and lose a few pounds a year of revenue from them".

Selftrade will not go down in our memories as having handled this well - but it is absolutely crazy to blame politicians and lawmakers for introducing legislation that tries to control financial services businesses in line with how it is done in other developed nations. Actually the UK and its crown dependencies have more fully developed AML regulation than places like the US, but regulation is the cost of doing capitalism safely.

lyndylu

I appreciate that a lot of time and effort must have gone into composing the previous post, but unfortunately it misses the point.

Most small private investors are well aware of the need for regulations and are prepared to comply with reasonable requests for information. The problem is that the request from Selftrade is excessive and accompanied with threats, a point that is glossed over by a single, and inaccurate, paragraph.

bowlhead99 wrote: »

Presumably, the FCA/PRA (i.e. their regulator rather than HMRC).

On the form at rival TD DI, they only have two relatively small boxes for you to fill in -"What is the source of funds/wealth to be invested in the account?" ; "How are the funds to be paid into the account e.g. Cheque, CHAPS?". The selftrade one is longer (but as you mention, the 04/14 form is not as long as the 03/14 one) but essentially you're just saying my net worth is in the £0.2-0.5m range, or the <£0.1m range, or the £1m+ range or whatever - and then saying I've acquired this over 20 years employment and a bit has come from saving and investing.

If it were true that Selftrade are only asking 'general' questions, similar to those asked by TD, then this discussion would never have started.

The reality is that Selftrade, in the Source Of Wealth section of the review form, are demanding that customers provide them with :-

• Total net wealth(including amount, timescales and where it originated)
• A detailed description of all wealth derived from employment, including sources, dates and amounts
• A detailed description of all other wealth, again including sources, dates and amounts

It may be the case that Selftrade are prepared to accept much less detailed information, but this only serves to highlight the fact that Selftrade is cynically using the need to 'comply with regulations' to get hold of a lot of personal and financial data it isn't entitled to from people naive (or intimidated) enough to supply it.