What am I going to do about my UK bank account? It’s become a dilemma facing every Brit going overseas, as well as those already living abroad and the many thousands of recent returnees.
For some clear straightforward advice, who better to turn to than that master of plain-speaking, Donald Rumsfeld.
There are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns; there are things we do not know we don’t know.
Now, I know DR didn’t have the plight of the British expat in mind when he coined these few choice phrases, nevertheless his words provide an accurate description of the situation in which all too many expats now find themselves vis-a-vis their banking arrangements.
Let me explain. Back in the good old days before the financial crash of 2008, before even the introduction of draconian anti-money laundering legislation post 9/11, (which has always impacted on the innocent at least as much as it ever deterred the guilty), it was generally deemed expedient for Brits going abroad to close their UK bank accounts, transfer their funds to their banks’ offshore subsidiaries, and then to open a local bank account in their new host country. An advantage of this course of action was that expats were able to prove to HMRC that they were living away from the UK; this meant that they would, in due course, become eligible for non-resident tax status and the financial benefits that came with such a label. So far, so good.
The trouble arose around a specific plank of the new anti-money laundering legislation known as KYC - Know Your Customer, which requires UK banks to identify their customers by, amongst other things, their UK postal addresses. The result was that British expats returning home, but without UK addresses and no longer holding UK bank accounts, were suddenly and peremptorily disenfranchised from the financial system.
The problem has been compounded ever since by just about everyone with a potential bearing on it, including the government and the banks themselves. The most recent HMRC judgement on non-resident tax status has done little to clarify qualifying conditions.
I’m told by the Financial Services Authority that “there are no FSA rules covering this area and the discretion as to whether a UK bank account can still be held open or opened without a UK address lies with each and every bank and what their internal policy and practice are.”
And yet when I knock on the door of the banks themselves, and ask them to explain their policy with regard to allowing a British customer to keep open a UK account whilst overseas, just three are willing to give me a straight answer. The rest either failed to reply, delayed replying, batted the question into touch, or hid behind their compliance departments who had inexplicably put a moratorium on the matter.
Why all the secrecy? Why not address the issue, effect a policy and implement it? Where customer loyalty has been demonstrated, why not return the favour, put the matter on the action agenda and acknowledge an obligation to serve?
You can read the personal accounts of expats who’ve had to do battle on this issue here. And you can read the numerous ways in which they have or will come a cropper for not having a UK bank account at some stage of their overseas’ adventure here. The list is depressingly long and the outcome is always the same - the loyal customer is cut adrift.
Meanwhile, there’s a new socking great boulder placed in the pathway of all returning expats. What happens to an expatriate’s credit rating when he or she is denied a UK bank account? This, after all, is what proves the reliability and steadfastness of an individual to other creditors. That’s one hell of a big known unknown and, as Donald Rumsfeld might say, this could turn out to be a thing we do not know we don’t know.
Subscribe to:
Post Comments (Atom)
3 comments:
British expat customers are objecting to the imminent transfer of their accounts from the Jersey branch of Bank of Scotland plc to Lloyds TSB Offshore Ltd from 10 January 2011 for two important reasons:
1) Accounts held at the Jersey branch of Bank of Scotland plc have historically been covered by the UK’s Financial Services Compensation Scheme, which cover deposits up to €100,000 (€200,000 for joint accounts) from the end of December 2010. The transfer of these accounts to Lloyds TSB Offshore Ltd would be detrimental to customers because they would instead be covered by the new untested and unfunded Jersey depositor compensation scheme, which offers much lower compensation of £50,000 (£100,000 for joint accounts), with aggregate maximum compensation for all Jersey-authorised banks capped at £100 million over any five-year period.
2) The Lloyds TSB accounts that will replace the Bank of Scotland accounts are not like-for-like accounts. In particular, the Lloyds TSB ‘Premier International Account’ imposes onerous conditions such as a high minimum balance. It is therefore far from flexible and quite incompatible with the Bank of Scotland ‘Flexible Plus Current Account’.
Customers' objections will be heard by the Royal Court of Jersey on 6 January 2011 during a hearing to approve the Scheme of Transfer.
Customers are requesting new parent Lloyds TSB Offshore Ltd to afford fair treatment to existing Bank of Scotland plc Jersey branch customers by permitting them to continue to operate their Flexible Plus Current Accounts under the same terms and conditions, even if this must be done under the banner of the new parent.
The letter to customers from Catherine Mearman and Tony Wilcox dated 19 November 2010 states that Lloyds TSB Offshore Ltd are “phasing out some of the existing Bank of Scotland deposit accounts”. This would imply that not all Bank of Scotland accounts will cease – as certain deposit accounts will clearly remain – so it should be possible for the Flexible Plus Current Account to continue in existence.
If Lloyds TSB Offshore Ltd were to fail to permit its customers to maintains these current accounts it would be doing them a great disservice. At the very least, it should offer to arrange for Bank of Scotland plc Jersey branch customers to transfer their current accounts to Bank of Scotland plc in mainland UK, despite the latter’s reluctance to accept accounts from currently-non-UK-addressed British citizens who are already known customers of one of their branches (the Jersey branch).
Mainland head office can surely be persuaded to accept the Jersey current accounts in light of the extenuating circumstances - including the unexpected merger between Bank of Scotland plc and Lloyds TSB plc funded by a massive taxpayer bailout - that resulted from the unprecedented financial crisis.
Unfortunately, Jersey-based Bank of Scotland is covered by the Jersey depositor's protection scheme which covers up to £50,000 and not the UK Financial Services Compensation Scheme, which as from the 1st January 2011 will cover up to 100,000 euros. The only benefit of having a UK-based parent is indirect, in that a UK parent bank is unlikely to let their offshore subsidiary fail. Although again this is no guarantee. Remember the parental guarantee from Kaupthing which never held true for offshore depositors? We have managed to get a response from Lloyds TSB Offshore regarding the change of account status, which doesn't look hopeful from your point of view! See the news story at: http://www.expatmoneychannel.com/content/lloyds-tsb-offshore-customers-object-changes-0
and good luck on raising your objections at the hearing. Hannah Beecham
Unfortunately there is some confusion, even among Lloyds TSB Offshore / Bank of Scotland International staff. I have enquired about deposit compensation by calling BoS in Jersey and Isle of Man in the past and front-line staff did not appear to be aware that accounts with Bank of Scotland International in the Isle of Man were covered by the Isle of Man's DCS, whereas those of Bank of Scotland plc's IoM and Jersey branches were covered by the UK's FSCS.
These details were contained in the small print that customer-facing staff had not noticed. In a way the confusion is understandable because there were two offshore Bank of Scotlands operating separate websites. One was Bank of Scotland plc with branches in Jersey and the Isle of Man (the former still is) and the other was Bank of Scotland International Isle of Man. To add to the confusion, Bank of Scotland plc in Jersey and the Isle of Man operated concurrently under two brands: Bank of Scotland and Bank of Scotland International.
BoS plc IoM accounts were automatically transferred to Lloyds TSB Offshore accounts earlier this year and DSC coverage passed from the UK's FSCS to the Isle of Man DCS. In Jersey, however, the law is different so BoS plc and Lloyds TSB Offshore were required to jointly issue a representation seeking an order of the Royal Court of Jersey sanctioning a scheme to transfer the Jersey-based accounts.
Until such time as the Royal Court of Jersey sanctions the Scheme of Transfer accounts with BoS plc Jersey branch will continue to be covered by the UK's FSCS as correctly stated in the reverse of statements but erronously on the Lloyds TSB Offshore website.
Post a Comment