Well, Whad'Ya Know...?

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.