Nigel Farage Coutts row: FCA warns banks they will ‘act’ if politicians are wrongly denied services

Ms Pritchard said while it is necessary for those in power to be asked for more information than others about sources of wealth, it needs to be an “appropriate level of inquiry”.

“(It) should not feel like the financial equivalent of someone rifling through your bin,” she said.

“We have heard that often it has, particularly for the families of political figures.

“If we find that banks and others are more tick-box than risk-based, we will act. Because proportionate additional financial scrutiny should not make it harder than it needs to be to take part in public life.”

In late June, former leader of the UK Independence Party Nigel Farage had his Coutts bank accounts closed and said he was refused accounts with other banks as a result of his political views.

This resulted in Dame Alison Rose, the CEO of NatWest, the company that owns Coutts, stepping down from her role.

The scandal brought on calls from the Treasury and ministers for the FCA to conduct a review into whether financial institutions are meeting their guidance over the treatment of PEPs and whether that guidance needs to be updated.

Ms Pritchard said the FCA are conducting a review focusing on how “firms are applying the definition of PEPs to individuals” and “checking that firms are being proportionate in their risk assessments of UK PEPs”.

“This sets out that banks and others must be proportionate – with greater scrutiny on those who pose the greatest threat. And we have been clear that UK public figures should generally be considered low risk,” Ms Pritchard said.

Ms Pritchard added that the aims of the review are to keep the “system clean” but not deny PEPs the access to financial products and “services necessary for everyday life”.

Dame Alison is controversially set to receive a £2.4 million pay package following her resignation.

Mr Farage described the pay deal as a “sick joke”.

Ms Rose had led the company for four years as chief executive officer but stepped down on July 25 following the row over the closure of Mr Farage’s account with Coutts.

She resigned after she admitted to being the source of an inaccurate story about Mr Farage’s finances following a discussion with a BBC journalist.

Ms Rose is currently seeing out her 12-month notice period with the banking group.

The firm has said it will pay her £1.155 million in salary for the year, £1.155 million in NatWest shares – which she will receive over a five-year period – and £115,566 in pension payments.

The pay deal totals around £2.43 million.

Ms Rose could also be in line for variable payments, such as performance-related bonuses, which were not included within the announcement.