The joys of being a 'politically exposed person'

I have been having what can only be described as a feisty exchange with a UK financial institution in recent weeks, caused by a piece of legislation that I was only dimly aware of, the Money Laundering Regulations 2007.

You may be surprised to hear that I am not actually engaged in money laundering - trust me, I wouldn't be travelling standard class on the train if I was - but in this era of international financial transfers, financial institutions are obliged to be far more careful than they might have been previously. This may have something to do with the increasing tendency to make organisations and individuals financially, and sometimes criminally, responsible for policing the acts of members of society, but it inevitably makes life more difficult for the inherently honest, i.e. most of us, by imposing a series of barriers to be surmounted before doing something that would otherwise be quite straightforward.

Some years ago, I invested a modest amount in said institution, and the funds have sat there ever since. I probably provided them with some evidence at the time, but they now wanted to see further proof of identity, as well as evidence as to where the funds came from. Easier said than done, as I hadn't retained the relevant documents - they're older than tax law requires me to retain, but they insisted.

I did indicate that I was curious as to why they should, after all this time, require such documentation, and I was told that it was a requirement of UK legislation, possibly their first mistake - I am a bureaucrat, and am 'rule-curious'. In reply, they indicated that they were sorry, but failed to provide details of the legislation, except to note that I am, apparently, a 'politically exposed person', although they didn't explain why.

I did guess, however, and did some research, uncovering the Money Laundering Regulations 2007, which indeed describe the criteria for such a classification. There was, however, a catch - whilst those holding high political office, as well as their direct family, are covered, there is an exception for domestic politicians.

So, in a spirit of inquiry, I asked if they were relying on the relevant Appendix, and whether they were aware of the exception, to which the answer came, "Yes, and yes, but it doesn't matter, we're within our rights to apply rules that go beyond the legislation stated.". I wasn't impressed. Whilst I acknowledge the right of the bank to apply their own criteria, I do object to being deliberately misled by a bank official as to the nature of those criteria and the manner in which they are applied.

But I am rather better informed as to the potential complications of my financial arrangements and of the need to retain paperwork in future. More filing...

Goodbye to payday loans. But good riddance?

The news that the Government will be taking steps to restrain payday loan companies appears to be generally welcomed. As Ros said more than three years ago, when asking the Government whether they planned to regulate loan companies charging high rates of interest;

Is my noble friend aware of the growing number of companies, some of which advertise on television, which offer short-term loans at extremely high rates of interest-in one case the APR is 2,689 per cent-plus an arrangement fee? Does she share my concern that a small short-term loan could very quickly turn into a very large lifetime millstone?

At the time, the Minister, Baroness Wilcox, noted the dilemma that previous Governments had faced in deciding whether or not to act. More than four months later, Stella Creasy introduced her Private Members' Bill to regulate the industry, a move which, eventually, led to yesterday's announcement by George Osborne.

I have, in the past, been sceptical about payday loans, worrying as I do about the ease with which some people have accumulated debts that they cannot service, without any great scrutiny. Others have noted that, if used sensibly, they can be a valuable way through which individuals can get through difficult, short-term, crises.

There is doubtless an element of truth in both arguments, which I now acknowledge. As a liberal, I believe that people should be trusted to make decisions that suit them and that, by removing, or restricting the availability of payday loans, their freedom is restricted unduly. However, choice, and the freedom that it implies, does not truly exist if the ability to evaluate the risks and benefits of any transaction is not present.

Restricting the freedom of some people against protecting those who need protecting is a very difficult choice, especially given the impact of unsustainable debt on some of society's most vulnerable people, and the likelihood that the community, through government, will have to step in.

Clearly, in order to survive within the restrictions to be laid down, the various payday loan companies will be obliged to change the way they do business, which will restrict their profitability and possibly force them out of the industry altogether. The service they offer will become less easily accessible and, possibly, less useful to those capable of making informed choices.

It seems that, whatever government does, there are casualties. And, regardless, the issues that lead people to turn to payday lenders will still exist. Perhaps it is time for government to look at ways to help people to manage their finances more effectively, and to encourage the growth of credit unions and friendly societies, for fear that loan sharks will surface once more in our towns and cities...

Saving Lib Dem Blogs for the Liberal Nation

Well, I've made my donation, making up for back years, so given the number of others who have given generously, Ryan should be funded for a while yet.

It is typical of Liberal Democrats that the funding for such a useful medium should be dependent on the kindness and sacrifice of an individual, and it must be acknowledged that many of us take Ryan for granted. We moan when Lib Dem Blogs goes down, which does occasionally irritate him, and just assume that technology is a cost-free option. Clearly, it isn't.

Perhaps, however, we need a more settled solution for the long-term health and prosperity of both Lib Dem Blogs and Liberal Democrat Voice. If I can help in that process, I will...