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My Broker Employs Underhand Box-Ticking Bullies

This article is a complaint against the excessive regulatory red-tape in today’s financial services industry…

…and the underhand, intrusive, absurd, bullying and pointless Review form currently being dispatched by the box-ticking jobsworths employed at my stock broker.

She’s been a client for 12 years and they are still not sure who she is

Here is the background:

My wife has had an online share-dealing account with Selftrade for the last 12 years. I’m named as a third-party on the account, so it’s generally me logging in and trading shares on my wife’s behalf.

In terms of actual share dealing, I’ve been pleased with Selftrade. Indeed, I’ve often found the account can buy smaller companies at better prices than another broker I use. The charges are not the cheapest on the market, but I’ve been quite satisfied with the service.

What Selftrade lacks, however, is proper back-office administration

In particular, the broker stopped accepting new clients at the start of 2013 after discussions with what is now the Financial Conduct Authority (FCA).

Apparently, Selftrade needed to sharpen up its regulatory admin.

Part of the improvements I guess included asking me to re-confirm my ‘third-party’ identity last October. That was annoying, since I had to ‘renew’ the same identity when I moved house just two years before.

(And even more annoying: I sent in my gas bill as proof of identity… and have yet to have it returned despite several requests and six months of waiting.)

Sadly, Selftrade still isn’t in a position to welcome new clients… which probably explains why the broker’s regulatory admin has gone into overdrive with a Records Review.

“We are requesting this information in order to comply with our regulatory requirements”

Selftrade explains the Records Review like this:

“We are requesting all our customers to reconfirm and refresh their proof of identity, including their residential address, registered bank details and other background information.”

“We are seeking to tighten our internal controls further and to ensure we are fully compliant with regulatory obligations.”

“We are requesting this information in order to comply with our regulatory requirements, specifically those relating to Money Laundering regulations 2007 and the Joint Money Laundering Steering Group Guidance. All FCA-governed institutions must adhere to these requirements.”

Fair enough.

But this Records Review form brings with it a number of issues.

I am convinced Selftrade is using this regulatory review as an underhand way of collecting data for marketing purposes

In particular, one section of the form asks for the “Intended purpose of your Selftrade Account” with tick-boxes for:

  • income generation
  • investment & savings
  • inheritance & pension planning

There’s also a section for Anticipated Trading account activity, which asks:

  • Total value of deposits to be made each year?
  • How many times do you expect to trade annually?
  • Over what term do you intend to invest?

In my opinion, it is outrageous for Selftrade to imply such questions are relevant to identity confirmation and checks on money laundering.

Hold on – doesn’t HMRC have all this data? Surely it should be checking for criminals instead of my broker?

Another section in the Review form asks about sources of wealth.

My wife is required to disclose her current employment details, her current gross annual income and – get this – her total net worth.

Other questions include:

  • How much of your total wealth was derived from employment?
  • Provide detailed description of the source (if from previous employment, please name employer)
  • Provide details of amount involved
  • Provide a detailed description of the timescales involved

She then faces the same questions for wealth generated by means other than employment.

Bottom line? I can’t see how anyone can accurately distinguish how much of their current wealth was derived from employment versus other means.

You only have to read the posts on our discussion boards to understand how some older investors might struggle to complete the form.

To me, the questioning simply appears intrusive and absurd.

And few people, if any, will be able to back up all their answers with hard evidence – so making these sections on the form somewhat futile.

Respond NOW or your account will be frozen

I’m not happy Selftrade is threatening to suspend accounts where the Review information isn’t received promptly:

“It is important that you provide the requested information as soon as possible as without it, it may be necessary to apply restrictions to your account… These restrictions may affect your ability to place trades or withdraw cash and/or investments, until the outstanding information is received.”

My wife received her Review form on Thursday, 17th April – the day before the long Easter break.

She then received an e-mail reminder to complete the form five days later on Tuesday 22nd April.

I am not a stock broker. I am not a regulator. I am not a money launderer.

So maybe I have missed something…

But from the point of view of an ordinary honest customer, this whole exercise looks completely pointless

For a start, any money launderers actually using Selftrade will lie on the form.

Meanwhile, honest clients will have to supply:

  • information Selftrade already has;
  • information Selftrade does not need, and;
  • information too vague or too detailed, which Selftrade won’t be able to verify whether it’s truthful or not.

It all really feels like regulatory box-ticking at its finest by over-bearing jobsworths.

Here’s a plan: why can’t brokers rely on the banks for identity checking?

What’s really irritating about this bureaucracy is that money can only go into or out of my wife’s Selftrade account through her bank account (via debit card or BACS transfer).

And yet my wife has NEVER been asked to prove her identity by her bank in the same intrusive, underhand and absurd manner.

No doubt my wife’s bank monitors her income and expenditure under the same money-laundering rules as Selftrade, and has decided she is not a criminal.

So I just can’t see why Selftrade wants to confirm my wife’s identity and wealth and so on, when her bank – the sole institution she uses to pass money to and from Selftrade – is perfectly happy with who she is and what she does.

Somebody at the FCA and Selftrade really ought to think about that.

Because there is certainly scope for Selftrade (and other brokers) to rely on the checks already made – and the vast transaction data already held – by their clients’ banks.

Here is more red-tape aggravation I could do without

My wife has yet to complete Selftrade’s form.

For a start, she needs to include an original or certified bank account statement from the last three months.

However, she no longer receives paper bank statements and Selftrade won’t accept printed copies from online accounts.

So that might require a visit to the bank for help to get an original. She then might have to queue at the Post Office to get the statement copied and certified (at a cost of £7.15).

She then has to send in the bank statement (original or certified copy) by post, which of course we all know is a perfect service in which nothing ever goes missing.

It all adds up to more aggravation simply to please the box-tickers. Still, I guess the regulators and brokers are just all doing their job.

Anyway, if there are any politicians reading this…

… you will secure my vote (and perhaps thousands of others) if you promise to overhaul the red tape that ordinary savers have to endure as they do their best to support their own financial future and not have to rely on the state.

In the meantime, I’m hoping this Review form will finally confirm to Selftrade who my wife really is, albeit after her 12 years as a client…

(And that one day I hope I get my bloody gas bill back as well.)

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