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Most of us find personal admin a chore. We will look for any excuse to put off filling in application forms or hunting out personal identification usually buried somewhere in the bottom drawer.
But banks and investment providers have demanded increasing mounds of paperwork from consumers looking to open even the simplest savings accounts.
When the FSA took over the compliance for money laundering in 2001 it issued guidance to tighten up identity checks.
Since then, to open bank accounts, customers have not only had to provide a passport and proof of address but often a wealth of unnecessary documentation including utility bills, birth certificates and driving licences.
For more complex investments such as offshore bonds and individual savings accounts, the obligations have become even more far-reaching, with applicants being asked to prove where the funds have come from with letters from accountants or even extracts from the press in the event of something like a company sale.
“It is almost as though people are looked down on when they’re trying to prove who they are,” said Shane Mullins, managing director of Nottingham-based advisory group, Fiscal Engineers. “It seems to be a case of guilty until proven innocent.”
The regulator admits that some banks were over-zealous with their interpretation of the guidance and adopted a “one size fits all” approach to identity checks.
The FSA is planning to issue new guidance early next year, which should make identity checks more proportionate to the risk level of the investor and investment.
Hopefully this will make life easier for savers looking to open basic bank accounts or savings accounts – just one document, most probably a passport, should suffice rather than multiple forms of identity currently required.
However, more thorough checks are still likely to be carried out for higher-risk products such as bonds, ISAs
and even some current accounts, so some investors could still
find themselves jumping through hoops to find a home for funds.
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