FSCS Deposit Protection Exclusion

midlandvalley

I received a letter from my bank advising the change in the FSCS protection limit. This was a lengthy three page letter and the section that caught my eye was titled "Exclusions from protection". Exclusion (1) reads: "The holder and any beneficial owner of the deposit have never been identified in accordance with money laundering requirements. For further information, contact your bank, building society or credit union."
This is quite worrying as many accounts which were opened prior to AML and FSCS rules being implemented may not have been identified and verified (known as ID&V). For a bank to identify and verify all its customers retrospectively is such a mammoth task that it has to be done over many years in a risk prioritised order - I work in this sector. The implication is that ordinary account holders who are low risk and have loyally banked for many years may not be covered as they had previously thought. I think this could be a huge black hole in the FSCS and I would be interested in knowing if this point has received any discussion. Even if the banks and Treasury say that such account holders could be okay there will always be a nagging doubt as to whether you will be covered when the chips are down. Maybe anyone in this situation should take the initiative and check with their banks to make sure that they have been ID&V'ed and receive proof of this.

Archi_Bald

If you are worried, just contact your bank(s) and make sure you have been fully identified.

Malthusian

This sounds like a misrepresentation of what the rules actually are.

The rules on who is eligible are defined in the FCA COMP Handbook. I think the section they are referring to is this one:

15) Persons whose claim arises from transactions in connection with which they have been convicted of an offence of money laundering.

Obviously this is not remotely the same as not having undergone anti-money-laundering identification.

ChesterDog

I think that exclusion clause ought to read that such individuals MAY be excluded under certain circumstances, rather than that they ARE excluded.

Not that I am suggesting that my identifying of their possibly wrongly drafted clause overrules it.

ChiefGrasscutter

The original phrase occurs within the Prudential Regulation Authority document policy statement PS9/15
http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwjvxouR2q7JAhVLaxQKHa51CBUQFggfMAA&url=http%3A%2F%2Fwww.bankofengland.co.uk%2Fpra%2FDocuments%2Fpublications%2Fps%2F2015%2Fps915.pdf&usg=AFQjCNF2A11C53FMYjZlkZQoHs36Yu16bA&sig2=Mgo7htVzHlAQkCMYIFD-JA&bvm=bv.108194040,d.d24&cad=rja