Thanks to everyone who posted replies to my blog of 14th June, Promises, Pledges and a Pile of Protection.
My interview with John Aspden, Chief Executive Officer of the Isle of Man's Financial Supervision Commission, is part of an ongoing research project I've initiated on behalf of ExpatMoneyChannel (http://www.expatmoneychannel.com) across the three islands that make up Offshore Britain - Jersey, Guernsey and the Isle of Man - to explore the options currently available to expatriate savers and investors following the financial crash of 2008/09. Its central theme is, 'where do we go from here?'
The project is completely independent. I stress this because, referring to KSF(IOM) and the Island's depositor compensation scheme, views were posted suggesting that I'd let "that man Aspden" off the hook; I had a "rose-tinted" view of events; some of you went so far as to say I'd written a piece of "cheap" and "shoddy" (someone even said "dangerous") PR for this finance centre.
As far as my personal blog is concerned, strong comment is always welcome; rudeness, however, is not.
If you think I failed to appreciate how deeply many of you feel about this, I'm genuinely sorry for both your loss and your ongoing pain. Assuming you're British expatriates, I write on your behalf - have done so for the last twenty years - and seek to pass on to you the best financial information and advice available in the market place.
One respondent asks whether I was "one of those in the pre-banking crisis days that were extolling the virtues to expats of banking on the IOM and Guernsey?" I wrote then (and still do) that what all savers should be looking for is a consistently good rate payer - and, I'm afraid, that won't be the highest. Again and again I wrote (and still do) that if the return looks too good to be true then in all probability it will be. If extraordinary rates were ordinarily achievable in the savings market, surely other deposit-takers would be offering them, too?
Back in the UK, participants in the Christmas hamper firm Farepak are still waiting for the return of their savings. That collapse happened back in 2006. Farepak's customers saved throughout the year to build up enough vouchers to redeem at the UK's largest retailers for Christmas presents and food. The point being that nowhere in the world will any government guarantee the private purse, whatever the plight of those who've suffered a loss - whether they're hard earning or just hard up. KSF(IOM) depositors are having to wait a very long time for compensation; and Farepak customers are still waiting and still not assured that the pay out will reach the insultingly small sum suggested of 15p in the £1. If you believe that somewhere in the world there's a financial Shangri-la where savers will always be bailed out by a lender of last resort (in other word's the country's tax payers), you're just plain wrong.
And to those of you warning that the Isle of Man is staring at a black hole in its Treasury, can I remind you that the UK is staring at a £176 billion black hole. And what about the black holes in Greece, or Spain, or Ireland, or Portugal?
As a reporter, commentator and author on personal finance for British expatriates, I have two objectives over and above reporting on the various products available in the market place; the first is to de-mystify, by digging beneath the small print and untangling the convoluted lexicon behind which the financial world operates; the second is to empower, so that my readers enter the market place knowing what questions they should have answered before they part with their money.
I know that were I a saver with KSF(IOM) and it was my money that was lost, and I was left stranded not knowing whether or when I would see it back, I would be frustrated in the extreme and not a little frightened.
For my readership not directly involved in the KSF(IOM) imbroglio, however, finding a savings home away from the UK is still an urgent task. The majority of British expatriates are forced to save in an offshore institution because current KYC (know your customer) regulation makes it so difficult to open a savings account back in the UK. What's more, whilst many of those expatriates want to save in sterling, others prefer the US dollar or the euro, to which end they also have to turn towards one of the three centres making up Offshore Britain. All of which is why in my blog, Promises, Pledges and a Pile of Protection, I volunteered where I was putting my money, ie, where my mouth is. I'm broadly supportive of the Isle of Man because, whilst nowhere is perfect, it provides depositors with a safety net of a £50,000 compensation scheme.
ExpatMoneyChannel. com is a bespoke platform for British expats needing to know about financial matters and wanting to talk to others in a similar situation. So, Mark - we'll be dealing with Guernsey shortly - watch this space. Lou, Angela, EV, Tricky, Stuart, are you speaking as expatriates? If so, you have the kind of experience ExpatMoneyChannel and its audience could learn from.
What do you intend to do next with your savings? www.expatmoneychannel.com/node/979
What were the factors that led you to choosing your new deposit-taker? www.expatmoneychannel.com/node/309 and www.expatmoneychannel.com/node/1154
Have you checked your new jurisdiction's financial regulation? www.expatmoneychannel/com/node/645
Do you clearly understand the difference between deposit protection and deposit compensation? www.expatmoneychannel.com/node/1129
And what do you feel now, in this post credit crunch era, about savings rates and investment returns? Your comments will move the debate forward. Stay with our forum, fuel the discussion, share your ideas and your know-how. If you're British expatriates, we'd love to have you on board.
Saturday, 19 June 2010
Monday, 14 June 2010
Promises, pledges and a pile of protection
Go back to 2008 ... it's the visual images that stick in the mind more than the words. The pink and black logo; the meandering queues; the besieged branches; thousands of ordinary savers desperate to withdraw their savings from the once mighty, now seemingly defunct, bank. Northern Rock or financial quicksand?
And then there was Iceland - and that pre-volcanic eruption in its fissile banking sector. The cash had gone up in smoke the way the ash was about to. Ordinary savers left stranded once again. Those of us on the sidelines gawped in horror as our fellow investors faced up to the appalling reality that their nest eggs had gone, vanished, vamoose. They'd been robbed within seconds. Would we be next?
And so it was offshore with the collapse of Kaupthing Singer & Friedlander (IOM). And suddenly expats around the world experienced that same numbing sense of insecurity not knowing what calamitous news they'd be waking up to the following morning. Whose bank would Humpty Dumpty its depositors next? And where, of where, were all the King's horses to help savers ride out the mess they found themselves in? Could any of the great finance houses be trusted? Any statement believed? And it all went on for long enough to compel the rest of us into making panic withdrawals. We scratched around like headless chickens looking for safe havens where none were to be found.
I know from personal experience, because whereas I didn't have have savings with Kaupthing Singer & Friedlander (IOM), I did have some tucked away with another offshore deposit-taker on the Isle of Man. In my case I had a pot of euros and was obliged to go to Offshore Britain with them because no bank in the UK at the time I was looking offered a straightforward euro savings account. And yes, when KSF(IOM) went down, I didn't hang around. I pulled my pot out quicker than any bank manager could say, "one bank collapse doesn't make an industry crash."
This wasn't entirely rational because the reason I'd chosen the Isle of Man over another offshore finance centre in the first place was solely down to the fact that this one offered depositors - the small guys - not just deposit protection, but deposit compensation. Plain and simple. And although I didn't have to suffer the same agony as KSF(IOM) depositors who endured months of insecurity about whether they'd ever see their money back, that situation has now changed; deposits have been restored. So I needn't have worried.
I believe it's time the rest of the expat saving world heard the good news.
Every single depositor with KSF(IOM) qualifying for the compensation scheme (which post collapse was raised from £30,000 to £50,000) has now received that latter sum back. This Island's government proved its maturity and stepped up to the plate by meeting its obligations in full. What's more, the liquidator's work has not finished; there are hopes of going further; the target is to compensate depositors with at least 93p in the £1, whilst hopes remain that eventually the full 100% will be recovered.
So what now? Well, after my recent tour of the Island finding out how the government has honoured its pledges to depositors, irrespective of their nationality or place of residence, and given that my own plans for future spending remain euro-centric, it's time for me to get this particular savings pot back on track. To which end, I'm bringing my next egg back to the Island. My choice is swayed by the one centre that has proved how it behaves when disaster strikes. The Isle of Man keeps to its pledges. As a saver this tells me all I need to know.
And what's my cut off point? It's very straightforward. The regulator guarantees that not a penny less than £50,000 will, in the face of a banking collapse, be recovered for each and every depositor. So, on that premise, not a penny more of that total breaks the ceiling of my deposit with each and every deposit-taker.
The Isle of Man has proved itself by sticking to, indeed improving on, its guarantee to depositors. That's the contract we have as depositors with the regulator. Now all we have to do is interrogate the middle man - the deposit-taker - and to hunt around for the best bargains. Happy shopping!
And then there was Iceland - and that pre-volcanic eruption in its fissile banking sector. The cash had gone up in smoke the way the ash was about to. Ordinary savers left stranded once again. Those of us on the sidelines gawped in horror as our fellow investors faced up to the appalling reality that their nest eggs had gone, vanished, vamoose. They'd been robbed within seconds. Would we be next?
And so it was offshore with the collapse of Kaupthing Singer & Friedlander (IOM). And suddenly expats around the world experienced that same numbing sense of insecurity not knowing what calamitous news they'd be waking up to the following morning. Whose bank would Humpty Dumpty its depositors next? And where, of where, were all the King's horses to help savers ride out the mess they found themselves in? Could any of the great finance houses be trusted? Any statement believed? And it all went on for long enough to compel the rest of us into making panic withdrawals. We scratched around like headless chickens looking for safe havens where none were to be found.
I know from personal experience, because whereas I didn't have have savings with Kaupthing Singer & Friedlander (IOM), I did have some tucked away with another offshore deposit-taker on the Isle of Man. In my case I had a pot of euros and was obliged to go to Offshore Britain with them because no bank in the UK at the time I was looking offered a straightforward euro savings account. And yes, when KSF(IOM) went down, I didn't hang around. I pulled my pot out quicker than any bank manager could say, "one bank collapse doesn't make an industry crash."
This wasn't entirely rational because the reason I'd chosen the Isle of Man over another offshore finance centre in the first place was solely down to the fact that this one offered depositors - the small guys - not just deposit protection, but deposit compensation. Plain and simple. And although I didn't have to suffer the same agony as KSF(IOM) depositors who endured months of insecurity about whether they'd ever see their money back, that situation has now changed; deposits have been restored. So I needn't have worried.
I believe it's time the rest of the expat saving world heard the good news.
Every single depositor with KSF(IOM) qualifying for the compensation scheme (which post collapse was raised from £30,000 to £50,000) has now received that latter sum back. This Island's government proved its maturity and stepped up to the plate by meeting its obligations in full. What's more, the liquidator's work has not finished; there are hopes of going further; the target is to compensate depositors with at least 93p in the £1, whilst hopes remain that eventually the full 100% will be recovered.
So what now? Well, after my recent tour of the Island finding out how the government has honoured its pledges to depositors, irrespective of their nationality or place of residence, and given that my own plans for future spending remain euro-centric, it's time for me to get this particular savings pot back on track. To which end, I'm bringing my next egg back to the Island. My choice is swayed by the one centre that has proved how it behaves when disaster strikes. The Isle of Man keeps to its pledges. As a saver this tells me all I need to know.
And what's my cut off point? It's very straightforward. The regulator guarantees that not a penny less than £50,000 will, in the face of a banking collapse, be recovered for each and every depositor. So, on that premise, not a penny more of that total breaks the ceiling of my deposit with each and every deposit-taker.
The Isle of Man has proved itself by sticking to, indeed improving on, its guarantee to depositors. That's the contract we have as depositors with the regulator. Now all we have to do is interrogate the middle man - the deposit-taker - and to hunt around for the best bargains. Happy shopping!
Friday, 16 April 2010
The True Meaning of a Row of Noughts
The global financial crisis (yes, we're still in an acute state, even if the banks have moved on) has left this country in debt to the tune of £176 billion. That's using the European interpretation of a billion which is a million million. To write that figure with all of its digits lined up, it looks like this, £176,000,000,000,000. Trouble is, when we type out a row of zeros that long, we tend to lose any sense of its significance. We glaze over the noughts and fail, utterly, to grasp the quantities involved. What does a million really mean, let alone a million million, or a billion, or even a trillion? These are figures way outside our arena of reckoning. They're numbers, yet they don't make sense.
A great explanation, comes from John Lancaster in his excellent book demystifying the credit crunch, Whoops.
Mr Lancaster draws on mathematician John Allen Paulos' illustration, inviting us first to guess how long a million seconds is - the answer is 12 days. Now, with that knowledge, try and guess how long a billion seconds is. I hope you're sitting down because the answer is almost 32 years. The purpose of such mental teasing, of course, is to appreciate the difference between a million and a billion.
These two straightforward sums give us an inkling of just how long a term stretches ahead of us before we, as a nation, can pay off this massive and painful debt.
So, as election fever covers Blighty, we observe the less than edifying spectacle of the three main parties tumbling over themselves to explain to the electorate exactly how they are going to make us pay it all back. Whichever way they cut it, the sum speaks for itself. And to balance the books, each household in the UK would need to cough up £56,000.
We must be ever watchful for increases in taxes and cuts in public spending. We must also watch our backs against stealth taxes: and none more so than the British expat. If there's no party canvassing for your vote, you can rest assured there are no politicians looking out for your interests. But you can also be sure, whoever forms the next government, their aparatchiks will weigh your value in terms of potential tax revenue.
We've been hearing a lot recently about how HM Revenue & Customs has been changing the rules governing residency although it has yet to set out proposed changes in a new rule book. All of which makes it very difficult for expats to ascertain, and so plan for, any tax charges that may be made on overseas income or, indeed, on income drawn, whilst overseas, from a UK source.
Situations such as these suit politicians down to the ground, because if they need to top up any empty coffer with tax from hitherto unsought quarters then a couple of million expats, with a question mark over their tax status, will do nicely. To find out more about HMRC's seeming reluctance to lay down clear rules, listen to Ronnie Ludwig as he spells out the implications for expats on www.expatmoneychannel.com/node/1167
And for those of you out there who don't want to miss your chance to vote, visit www.aboutmyvote.co.uk - it's the site of the independent UK elections' watchdog, The Electoral Commission.
A great explanation, comes from John Lancaster in his excellent book demystifying the credit crunch, Whoops.
Mr Lancaster draws on mathematician John Allen Paulos' illustration, inviting us first to guess how long a million seconds is - the answer is 12 days. Now, with that knowledge, try and guess how long a billion seconds is. I hope you're sitting down because the answer is almost 32 years. The purpose of such mental teasing, of course, is to appreciate the difference between a million and a billion.
These two straightforward sums give us an inkling of just how long a term stretches ahead of us before we, as a nation, can pay off this massive and painful debt.
So, as election fever covers Blighty, we observe the less than edifying spectacle of the three main parties tumbling over themselves to explain to the electorate exactly how they are going to make us pay it all back. Whichever way they cut it, the sum speaks for itself. And to balance the books, each household in the UK would need to cough up £56,000.
We must be ever watchful for increases in taxes and cuts in public spending. We must also watch our backs against stealth taxes: and none more so than the British expat. If there's no party canvassing for your vote, you can rest assured there are no politicians looking out for your interests. But you can also be sure, whoever forms the next government, their aparatchiks will weigh your value in terms of potential tax revenue.
We've been hearing a lot recently about how HM Revenue & Customs has been changing the rules governing residency although it has yet to set out proposed changes in a new rule book. All of which makes it very difficult for expats to ascertain, and so plan for, any tax charges that may be made on overseas income or, indeed, on income drawn, whilst overseas, from a UK source.
Situations such as these suit politicians down to the ground, because if they need to top up any empty coffer with tax from hitherto unsought quarters then a couple of million expats, with a question mark over their tax status, will do nicely. To find out more about HMRC's seeming reluctance to lay down clear rules, listen to Ronnie Ludwig as he spells out the implications for expats on www.expatmoneychannel.com/node/1167
And for those of you out there who don't want to miss your chance to vote, visit www.aboutmyvote.co.uk - it's the site of the independent UK elections' watchdog, The Electoral Commission.
Thursday, 18 March 2010
One rule for him and one for the rest of us...?
What amazes me is how Lord Ashcroft ever got away with being a non-dom for tax purposes in the first place.
Put very simply, your domicile is determined by your roots. The country in which you were born and raised will generally be the domicile that stays with you until you die. Looked at from another angle, your domicile will be the country you most relate to. Expatriates who have lived abroad for decades, bought and resided in foreign properties, paid foreign taxes and never returned to the UK can still be classified as domiciliaries of the UK by HM Revenue & Customs, who will tax them and their estates accordingly.
An expatriate keen to shake off UK domicile status and take up another, must provide a plethora of evidence, direct and circumstantial, to that end. Life-style has to be, and be seen to be, 100% that of the adopted country. Implicit in this course of action is the severing of all ties with the UK, and total immersion in the new country's culture, including, where necessary, its language.
So how can there be any doubt as to the domicile of a man who is a peer of the realm and actively legislates for the rest of us? Just what part of his extraordinary and privileged participation in the UK's governance could possibly be viewed as, to use the jargon, 'disconnected' and 'remote'?
Britain's legal system is one of binding precedent, and any long-term expat with an interest in these matters will have an in-depth understanding of the nuances of the label 'domicile', and the clear distinction in tax status between 'non-resident' and 'non-domicile' - a point which, in the debate about Lord Ashcroft, William Hague seems consistently to muddle. They will have followed the case of Gaines-Cooper versus HM Revenue & Customs as it wended its way through the Court of Appeal towards its landmark ruling.
Despite being non-resident for well over thirty years, the detail of Mr Gaines-Cooper's connections to the UK which caught the taxman's eye included holding a badge at Royal Ascot for 30 years, having a Rolls-Royce or two garaged in the UK, and the payment of fees to a private school in the UK shortly after the birth of a son.
Gaines-Cooper lost his case.
I like to think I'm as imaginative as the next woman, but I doubt even J K Rowling could find a way of camouflaging the domicile of Lord Ashcroft. This peer of the realm's presence and involvement in the UK is plainly evident, not only in his life-style, but in a way that impacts directly on the rest of the population.
If such trifling details as those in the Gaines-Cooper case can stand up as irrefutable evidence of domicile, can someone explain to me how on earth Lord Ashcroft has been getting away with it?
http://www.expatmoneychannel.com/node/1167
Put very simply, your domicile is determined by your roots. The country in which you were born and raised will generally be the domicile that stays with you until you die. Looked at from another angle, your domicile will be the country you most relate to. Expatriates who have lived abroad for decades, bought and resided in foreign properties, paid foreign taxes and never returned to the UK can still be classified as domiciliaries of the UK by HM Revenue & Customs, who will tax them and their estates accordingly.
An expatriate keen to shake off UK domicile status and take up another, must provide a plethora of evidence, direct and circumstantial, to that end. Life-style has to be, and be seen to be, 100% that of the adopted country. Implicit in this course of action is the severing of all ties with the UK, and total immersion in the new country's culture, including, where necessary, its language.
So how can there be any doubt as to the domicile of a man who is a peer of the realm and actively legislates for the rest of us? Just what part of his extraordinary and privileged participation in the UK's governance could possibly be viewed as, to use the jargon, 'disconnected' and 'remote'?
Britain's legal system is one of binding precedent, and any long-term expat with an interest in these matters will have an in-depth understanding of the nuances of the label 'domicile', and the clear distinction in tax status between 'non-resident' and 'non-domicile' - a point which, in the debate about Lord Ashcroft, William Hague seems consistently to muddle. They will have followed the case of Gaines-Cooper versus HM Revenue & Customs as it wended its way through the Court of Appeal towards its landmark ruling.
Despite being non-resident for well over thirty years, the detail of Mr Gaines-Cooper's connections to the UK which caught the taxman's eye included holding a badge at Royal Ascot for 30 years, having a Rolls-Royce or two garaged in the UK, and the payment of fees to a private school in the UK shortly after the birth of a son.
Gaines-Cooper lost his case.
I like to think I'm as imaginative as the next woman, but I doubt even J K Rowling could find a way of camouflaging the domicile of Lord Ashcroft. This peer of the realm's presence and involvement in the UK is plainly evident, not only in his life-style, but in a way that impacts directly on the rest of the population.
If such trifling details as those in the Gaines-Cooper case can stand up as irrefutable evidence of domicile, can someone explain to me how on earth Lord Ashcroft has been getting away with it?
http://www.expatmoneychannel.com/node/1167
Wednesday, 16 December 2009
Beware shark advisers bearing gifts
Graham Barnes, International Director with The Fry Group, is warning expatriates to be on their guard against being sold inappropriate savings products. Listen here to my conversation with him and learn how you can avoid being sold an investment pup.
Wednesday, 7 October 2009
CURRENCY COMMENTARY
On BBC 2's Working Lunch I'm talking about the impact currency conversion has on the spending power of Brits migrating abroad.
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