Why does Nationwide ask so many private inquiries to open a financial savings account?

I am a Nationwide current account customer and also have my mortgage with it.

Recently, I went to open its one-year fix savings deal with a rate of 4.15 per cent.

But, to do so, I had to jump through a load of questions – and I cannot understand why.

Some made sense – my nationality for example. But why does it need to know my employer, employer’s address, job role, alongside annual income and where the money is coming from to open the savings account?

Puzzled: Our reader had to answer several tedious questions to open a savings account with Nationwide despite already having a current account and mortgage

It all feels rather intrusive to open a savings account. I’m not applying for credit.

It’s been a while since I’ve opened a savings account and I don’t remember all this rigmarole before.

Helen Kirrane of This is Money replies: You would think, given you already hold not only a current account but a mortgage with Nationwide, it would already have the details required of you and would be able to make the process of opening a savings account more streamlined. 

Part of the reason for the barrage of questions is down to ‘know your customer’ checks, which trace their origins back to the 1970s. 

These checks are a standard banking practice adopted around the world to verify the identity of customers. They are put in place by banks and financial firms to help to detect money-laundering and fraud. 

I spoke to Nationwide, and it alluded to these checks when I asked what was going on. It told me the information it gets from the questions it asks customer when they open accounts helps it to detect ‘unusual activity’ and protect customers from fraud and scams.

Though these types of checks are nothing new, banks have ramped up their anti-money laundering and fraud measures in recent years. 

They certainly make the experience of opening a new account more awkward as you have to fish around for your office postcode. 

I asked a savings expert for their take on your predicament.  

James Blower, founder of website Savings Guru replies: These are all questions that Nationwide is using to help with anti-money laundering and fraud. Banks are tightening up and this is likely why your reader hasn’t had this experience previously. 

As to whether Nationwide would already have this information because your reader is a current account and mortgage customer, there could be a few things going on here. 

Firstly it may be duplication, or it could be that some of Nationwide’s systems don’t talk well to each other (so it cannot be extracted from the applications from current accounts or mortgages). 

It may be that the information it holds is old, for example the mortgage and current account could have been opened a few years ago therefore the information needs updating. 

Finally, it may be that Nationwide did not collect that information when those applications for other products were made.

While I do have some sympathy with your reader that this might feel intrusive, unfortunately it is increasingly necessary. 

To take an extreme example, someone putting £250,000 in a savings account, who is doing a job which is earning minimum wage, but stating the savings are from their employment is clearly something which warrants further investigation.

The issue here is that banks and financial professionals have been good at educating people about how credit works and credit scoring, so people do understand debt better. But they have done much less to inform them about savings and non-debt related products. 

Some of this is because much of this is relevant to fraud and anti-money laundering and therefore there’s some reluctance to share too much on how things work as this will help the very people those measures are targeted at.

Most people wouldn’t accept £50,000 in cash from someone they didn’t know for goods or services, with just a name and address provided. 

This is the same for banks – they cannot just take your savings without knowing more. Some of this will be done discretely via electronic checks but some of this will be done by collecting more information at application stages.

A Nationwide spokesman replies: Even where customers have a long-standing relationship with their financial services provider, their circumstances can change over time. 

It is important the information we hold remains accurate, so from time to time we will ask customers to confirm certain details, to ensure we effectively manage economic crime risk and meet the requirements set out in relevant laws, regulation and guidance. 

One of the ways we do this is by asking questions when they open a new account. 

We also ask questions to understand how the customer plans to use the account and what is normal for them. This information helps us detect unusual activity and protect our customers from fraud and scams.

While we appreciate this may feel intrusive, we only ask for information we need to keep Nationwide and its customers safe.