BBA says expat onshore banking treatment justified on 'higher fraud risk' grounds

The British Bankers' Association (BBA) has waded into the debate on British expats' access to onshore bank accounts, pointing to difficulties obtaining personal information as a key reason for its members' reluctance to embrace offshore savers.

Its comments come in a letter to the Landsbanki Guernsey Depositors Action Group (LGDAG) which is calling on the government, banks and building societies to review the "commercially driven" practice of denying UK bank accounts to British expats.

Angela Knight, BBA chief executive, confirms in the letter there are no legal barriers or regulatory requirements preventing the offering of cross border services and some banks offer these services based on their own commercial considerations.

"These banks may impose additional conditions and in some instances higher charges," the letter reads.

"It is also important to bear in mind that UK expatriates are treated no differently to other non-UK residents. However, UK expatriates are treated differently to UK residents due to higher fraud risks caused by the limitations on verifying overseas addresses and the possible lack of credit records within the UK. The need to make different and additional checks to mitigate these risks imposes higher one-off and on-going administration costs."

However, Emma Bergh-Apton, author of the report 'Offshore Personal Savers-Dispelling the Myths' which was presented to the Treasury Select Committee in February, says this justification is "sheer bunkum".

She says: "The offshore subsidiaries of the UK banks and building societies carry out extremely rigorous checks via certified proofs of identity, addresses, passports and other documentation when opening offshore accounts for expats without any problem whatsoever.

"One has to ask why they are incapable of doing this in their onshore branches."

She also hit out at Knight comparing the situation of UK expats to that of other non-UK residents.

Bergh-Apton says: "This breathtaking statement apparently justifies excluding British citizens from banking services by lumping them with nationals of every other country in the world who would have no right in the UK unless resident there and who can presumably bank in their own countries."

Martin Thurlow, an expat working in the Middle East, says he has no choice but to bank offshore.

"UK banks do not want to do business if I am not a resident. All they do is refer me to their offshore branches; the same branches Alistair Darling brands as tax havens for tax dodgers."

He believes that while the government claims there is no legislation preventing UK banks from accepting non-resident account holders, the extra work required to establish and maintain the accounts such as satisfying the EU Tax Directive, is "not worth the hassle" for banks.

HM Treasury and the BBA have agreed to continue to monitor the account provision situation closely and the BBA is looking at ways of providing a sign-posting service to UK expats on its website.

Contact Sarah Griffiths at: Sarah.Griffiths@incisivemedia.com