Call for offshore depositors to gain full access to onshore accounts

They have accused the Government, banks and building societies and the FSA of passing the buck on making it easier for offshore depositors to hold an onshore account covered by the Financial Services Compensation Scheme (FSCS).

According to Emma Bergh-Apton, a member of Kaupthing Singer & Friedlander Isle of Man Depositors Action Group (KSFIOMDAG) and Landsbanki Guernsey Depositors Action Group (LGDAG), the 10,000 plus depositors in the two failed Icelandic bank subsidiaries would not be without the majority of their savings if crown dependency residents had no choice but to hold their savings offshore.

Bergh-Apton is also author of the report 'Offshore Personal Savers-Dispelling the Myths' which was presented to the Treasury Select Committee in February. In it she criticised FSA chief executive Hector Sants' "smoke and mirrors response" when asked about the 'Know Your Customer' rules applying to crown dependency residents seeking to make deposits in mainland banks in the UK.

"The 'Know Your Customer' rules do not preclude UK banks offering accounts to offshore UK citizens," says Sants. "What does appear to be the case and has been the case is that only a very limited number of banks have chosen to do so. This is not to do with our rules."

According to Bergh-Apton's survey of 57 banks and building societies based in the UK, only two small building societies were prepared to open accounts for UK citizens living in the crown dependencies and only upon personal application at the branch and subject to identity checks.

Their reluctance to offer new accounts to non-residents may be because of "more onerous anti-money laundering checks", according to MP Ian Pearson, speaking at the House of Commons' Icelandic Banking Debate.

Whatever the reasons for the shortage, Bergh-Apton does not believe two building societies represent any form of consumer choice for offshore UK citizens wanting to open an onshore account.

Bergh-Apton says: "All British citizens should have the freedom to open a traditional or, given the locations in which some expats live, an ebanking account with an onshore bank or building society of their choice."

She believes there should be an investigation into why the banks and building societies continue to "be permitted to dictate that some British citizens should be refused the right to bank in their own country".

"The FSA has a responsibility for the supervision, regulation and implementation of banks' and building societies' policies. As such the FSA has permitted this situation to arise and continue unchallenged," she says.

However, the FSA and banks appear to be passing the buck on where responsibility lies for assessing policy on access to onshore accounts.

An FSA spokeswoman says: "It is not within our remit and it's left to the discretion of the banks."

A spokesman for the British Bankers Association (BBA) says offering mainland bank accounts to UK citizens in the Channel Islands is "a commercial decision banks can make for non-residents". He agrees there are no rules that prohibit crown dependencies residents from having an onshore bank account.

"We are in discussions with the Treasury about this and ministers are asking questions. It's more of a government issue," he says. "We want to retain members' commercial freedom to contract."

He adds the association should not have to open bank accounts to higher risk individuals but concedes banks' roles in society should be looked at.

Inquiries on the issue are ongoing but there is no comprehensive report on the issue as yet.

Categories: Offshore Investment

Tags: Fsa| Kaupthing| Bba| Landsbanki