Why do banks push depositors offshore?
An anonymous commentator on a recent blog about one woman's experience with the Isle of Man, responding to a comment that different interest rates push expatriate savers decisively towards offshore banking, noted this:
"it's not just the interest rates themselves that drew (or pushed) UK expats into offshore banks - the availability of onshore sterling accounts for UK citizens living abroad was extremely limited, something the Treasury Select Committee on the Icelandic banks' collapse itself accepted - my own experience was that availability was effectively zero, and that only changed as a result of the collapse.
Nearly everyone has accepted that this was in fact the case - the British Banking Association (BBA) even put a tool on its website to assist expats in finding banks that didn't have the (unnecessary) requirement to prove a UK address as part of the KYC anti-money-laundering checks. UK anti-money-laundering legislation does not require this, so why were UK banks unilaterally - under the guise of over-zealous "regulatory compliance" - pushing depositor expats into their offshore vehicles?
Could it be that their business model found this offshore source of "cheap money" (cheap from both a regulatory and a commercial perspective) attractive? The money sourced generally ended up in the bank's head office, so why did the FSA collude in this occurring by allowing these circumstances to arise?"
Good points. Why is nothing being done about this?
"it's not just the interest rates themselves that drew (or pushed) UK expats into offshore banks - the availability of onshore sterling accounts for UK citizens living abroad was extremely limited, something the Treasury Select Committee on the Icelandic banks' collapse itself accepted - my own experience was that availability was effectively zero, and that only changed as a result of the collapse.
Nearly everyone has accepted that this was in fact the case - the British Banking Association (BBA) even put a tool on its website to assist expats in finding banks that didn't have the (unnecessary) requirement to prove a UK address as part of the KYC anti-money-laundering checks. UK anti-money-laundering legislation does not require this, so why were UK banks unilaterally - under the guise of over-zealous "regulatory compliance" - pushing depositor expats into their offshore vehicles?
Could it be that their business model found this offshore source of "cheap money" (cheap from both a regulatory and a commercial perspective) attractive? The money sourced generally ended up in the bank's head office, so why did the FSA collude in this occurring by allowing these circumstances to arise?"
Good points. Why is nothing being done about this?
posted by TJN at 5:01 am
2 Comments:
It was my research which was taken into evidence by the Treasury Select Committee and John MacFall requested a response from Ektor Sants of the FSA, who would look into the matter.
Needless to say, nothing further has been forthcoming.
The pathetic attempt by the BBA to demonstrate that onshore bank accounts are available to ordinary non-wealthy British Expatriates, via their website, offers no real choice, just accounts with the 'usual suspects' who try to divert the reader to one of their offshore accounts and charge a monthly or annual fee for the privilege.
My current research so far reveals that the UK is the only country of the 95 polled thus far, which allows banks and building societies to refuse accounts to non-resident citizens in their home country, under the guise of implementing their own version of the Anti-Money Laundering legislation.
In fact, no law has ever been proposed or implemented in UK which prohibits British Expatriates from holding bank or building society accounts and enjoying the same range of consumer choice as their fellow citizens in the UK.
This is yet another example of extreme and convenient myopia by HM Government.
While high net worth individuals may prefer to keep their sterling offshore, it is hard to justify why the majority of we ordinary, hard working and retired Expatriates should be denied our right to open the account of our choice in our home country - particularly now that our funds are even more at risk if the Isle of Man, Guernsey, Jersey et al decide to limit their existing and, in the case of Jersey proposed, Deposit Compensation Schemes to 'resident protection only'.
It is long overdue that this grossly inequitable situation is rectified and via the European Courts if necessary.
Emma Bergh-Apton
We have the same situation. We have for a long time had a bank of scotland account. Recently we asked to open another account as the one we had was paying a very poor interest rate. The bank said we had to go to their Isle of Man offshore branch to do this. I have lodged a formal complaint with the Bank of Scotland which they tried to doge. I think it is scandalous that a UK bank can refuse a UK citizen with a good credit rating a Uk account. I would like to contact Emma to help me in the fight against the bank of scotland.
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