Banking Crisis - Treasury Contents

Memorandum from Emma Bergh-Apton

  I understand from a fellow depositor in Landsbanki Guernsey that the Committee will be taking oral evidence from a number of high street banks as well as the Chancellor of the Exchequer as part of its Banking Crisis Inquiry, probably some time in February.

  I would be obliged if you would pass this letter, together with the attached document, to the Committee for its consideration.

  I am an Expatriate British citizen, native of East Sussex and voter in Bexhill & Battle constituency, currently resident in Mexico. When I left Britain, I was advised by one bank—with whom I had been a customer for over 30-years—that I could no longer retain my account as I would no longer have a UK address. Another advised me that they would not accept my HMRC R.85 form, to receive bank interest free of tax, as a non-resident, as their, "... systems are not able to handle such requests".

  Attempts to open accounts with other banks and building societies in the UK proved impossible in the absence of a UK address for the account. I was therefore obliged to open accounts in the Crown Dependencies of the Isle of Man and Guernsey as my life-savings and State pension are in sterling.

  I will not bore you with the due diligence I undertook in terms of scrutinising the relevant Parental Guarantees and rating companies such as Moody's and Fitch's of the banks I ulitmately selected, nor of the substantial and entirely justified amount of Anti-Money Laundering compliance, identity and address substantiation documentation—all notarised—which I had to produce to open my offshore accounts, which was identical to UK-onshore banks' requirements. Sufficient to say that of the banks I chose to save with, two—Kaupthing Singer and Friedlander, Isle of Man (KSF IOM) and Landsbanki, Guernsey (LG) both went into provisional administration in October 2008.

  Following my experiences and those of many other Expatriate depositors with KSF IOM and LG, which emerged via their respective Depositors' Action Groups—together with the misleading assertions being made in the House of Commons, that Expatriates could and indeed should have opened UK bank accounts and thereby be protected by the FSA as, "there is no law against their doings so"—I undertook an extensive research project to establish the true situation.

  As the attached summary of this research and data analysis of some 57 British bank and building society accounts unequivocally confirms, it is virtually impossible for an Expatriate British Citizen to retain or open an onshore bank account legally.

  What is absolutely appalling is that despite the fact that the actual Law does not proscribe expatriates from holding UK accounts, it is the very "Know Your Customer" Guidelines, to comply with the Anti-Money Laundering (AML) legislation, devised and operated by the banks and building societies themselves which effectively blocks British citizens, without a UK address or entry on an electoral roll, from banking in their own country.

  As a result of this arbitrary and surely grossly inequitable, misinterpretation and, in- effect, audacious rewriting of the law by these bodies, I and many other depositors in KSF IOM and LG were left with no alternative but to bank our sterling savings offshore. As a direct result of the Banks' and Building Societies' client policies, we have been placed in the position in which we now find ourselves, with our hard-earned savings gone.

  Surely it is time to treat all British citizens equally, subject to AML checks, wherever they live and oblige the onshore commercial banking sector to revise their unjust, discriminatory practices. If the banks in the Crown Dependencies can and do perform comprehensive Identity and Address checks, then surely the UK financial institutions are capable of doing so too—after all, many of them are the self-same banks and building societies which own and operate those offshore branches which were pleased to accept our accounts in Guernsey and the Isle of Man!

  Similarly, instead of arbitrarily refusing to recognise account-holders' legal rights, the onshore banks and building societies should be obliged or otherwise "encouraged" to comply with HMRC documentation such as the R.85 form, when this official confirmation is provided to confirm that Expats' interest can legitimately be paid free of tax.

  Thank you for taking the time to read this letter and I sincerely hope that you will feel able to assist British Expatriates by putting pressure on the banks and building societies to revise their guidelines in order to provide equal access to UK-banking facilities.

February 2008



  The time is long overdue to set the record straight regarding the combined 10,000+ personal depositors in Landsbanki Guernsey (LG) and Kaupthing Singer and Friedlander Isle of Man (KSF IOM), who have been the subject of negative and inaccurate statements by members of HM Government in recent weeks, following the collapse of these two offshore subsidiaries of Icelandic banks.

  Specifically it has been consistently implied that these small depositors are "tax-avoiders" and the very fact that they bank offshore somehow implicitly indicates that they must have something to hide or are in some way nefarious. Chancellor Alistair Darling referred to the Isle of Man as, "a tax haven sitting in the Irish Sea".[75]

  In his Pre-Budget Report Chancellor Alistair Darling said: "... the recent financial turbulence has highlighted potential problems with overseas territories and Crown Dependencies, such as the Isle of Man and Channel Islands. They attract banking customers with lower taxes—without contributing to the UK Exchequer".[76]

  Whenever a direct question regarding the predicament of depositors in LG and KSF IOM is asked of Gordon Brown or Alistair Darling the consistent response is that "the offshore banks need closer scrutiny", or words to that effect. Again, the clear inference is that those who bank offshore, regardless of the reason and with whatever humble means, by extension, must be high-rolling tax-dodgers and unworthy of any compassion or consideration.

  This response may be a useful question avoidance tactic, and may be accurate in terms of certain offshore corporate investment vehicles so beloved of the City of London, but it is very far from the truth in the case of these two groups of personal depositors.

  It has also been asserted that Expatriates could, and indeed should have had onshore bank accounts because then they would have been covered under HM Government's Depositor Protection Scheme. As the following facts demonstrate, these allegations are simply politically expedient myths.


  Although not members of the EU, both Guernsey and the Isle of Man are signatories to the European Union Savings Directive 2005 (EUSD), which forces EU resident savers depositing money in any country other than the one in which they are resident to choose between forfeiting tax on interest earned, at the point of payment, or allowing notification by the offshore banks to tax authorities in their country of residence. This tax affects any cross-border interest payment to an individual resident in the EU.[77]

  According to a straw poll of those savers caught up in the LG collapse, conducted by Landsbanki Depositors' Action Group (LGDAG): 35% are Britons from Guernsey and Jersey who were using their own high street banks and are taxed at source by their respective governments.

  British Expatriates account for the largest group representing 49% of depositors. These fall into two camps—those who live in the EU and are taxed under the EUSD, with additional tax adjustments made via annual tax returns or roll-up agreements with the Inland Revenue, and those who reside outside the EU and therefore have no liability to UK tax. The latter are paid gross and usually taxed on their global incomes by their country of residence or on inward remittances. This group includes teachers, medical personnel, engineers, journalists, some of whom live and work in places and under conditions that most Britons would not even dream of visiting or enduring; plus a large group of pensioners who rely on interest from savings to supplement meager State pensions.

  Of the remainder, 12% are British nationals living in UK who fall under the EUSD and 4% are non-British depositors.

  As far as "high-rollers" are concerned, a straw poll of LGDAG members showed that 60% of savers had between £10K and £100K deposited. In the £100K-£250K band were 11% while only 2% had more than £500K and it is known that two of these were in the throes of moving back to UK having sold their homes overseas and placed the proceeds with LG in the interim. The KSF IOM poll shows similar percentiles.

  These savings belonged to provident, hard-working British people, who had worked and saved hard—not tax-dodgers or benefit-fraudsters. This catastrophic situation has resulted in the loss of lifetime savings of ordinary people built up over the years, for various purposes: for retirement, families' house purchases or deposits, university fees for dependent children, long term medical care provision and security for the future.


  Economic Secretary (Economic and Business), HM Treasury, and also Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform—Mr. Ian Pearson, MP, stated during the House of Commons' Icelandic Banking Debate, "On the question whether depositors in the Isle of Man or Guernsey had any choice in the matter of opening offshore accounts, or whether non-UK residents are forced to open accounts offshore, I can confirm that this is not the case. There is no legal bar under UK financial services regulation that would prevent a non-UK resident from opening a new bank account here. When an account is opened remotely, more onerous anti-money laundering checks are, quite properly, required because of the increased risks involved. This might well be a factor in the willingness of some UK banks to offer new accounts to non-residents. However, this would not be a burden for customers who move offshore but wish to retain existing accounts".[78]

Given that 96% of depositors are British it is perfectly reasonable that they would wish to keep their savings and pensions in sterling. The recent survey of LG Expat depositors produced consistent reports of three problems encountered with British onshore banks, with which they banked prior to moving overseas.

  Some Expats were refused permission to switch their UK account details to an overseas address and thus obliged to close them. In several cases this was when the Inland Revenue R105 form was produced, which provides for the non-EU resident individual to receive interest gross of tax. Here some onshore banks replied that they were unable to pay interest gross due to their automated tax systems.

  In other cases, where Expats attempted to provide overseas addresses for their existing accounts, the banks responded that the account must be transferred to their offshore subsidiary in the Channel Islands or Isle of Man.

  Those few who were allowed to switch to an overseas address and keep their existing current accounts, report being refused permission to open new savings accounts with the same bank. Others, who kept existing accounts at one bank found they were prohibited from opening accounts in other banks who offered better interest rates, and thus were locked into an uncompetitive interest rate if they continued to bank onshore.

  Expats all report that it is impossible to open a new onshore UK bank account. The experiences of personal depositors, provided in detail by members of LDAG, have overwhelmingly debunked Pearson's statement. Additional in depth research validated these experiences.

  According to the guidelines of the Joint Steering Committee Money Laundering, the onus is firmly on financial institutions to "Know their Customer". Although there is a slight variation between banks' and building societies' approach to enforcing and implementing the guidelines, the end result has been to prevent Expatriates from opening bank accounts onshore.

  A survey of 57 banks and building societies based in the UK, conducted this month, elicited only two small building societies which were prepared to open accounts for Expatriates, and then only on personal application at the branch and "subject to (unspecified) identity checks". One of these only had one branch. Applying in person is obviously not easy when one is working in Samoa, Bogota or anywhere else overseas and needs an immediate place to save for the future, in sterling.

  This research consistently showed that without exception the conditions attached to opening a savings account, with a bank, include the proviso that the applicant must be a UK Resident, which explicitly rules out Expatriates. Variations on the theme included: "A permanent resident. We do not accept applications from the Isle of Man or the Channel Islands", "Resident in the UK for tax purposes", "Permanent UK Resident", "Available to UK residents and trustees acting on their behalf", and "must be a permanent resident (for at least the last three years) of the United Kingdom", (which excludes the Channel Islands and Isle of Man).

  The Building Societies apply similar conditions. Like banks, some explicitly excluded Expats, while others restricted applications by the nature of their "Know Your Client" proof of identity and address requirements, demanding current UK-specific utility bills, local authority bills, driving licences (which contain UK address), residence permits issued by the Home Office to EU Nationals, State Pension or Benefit books and Tenancy agreements, etc. all of which relate to UK residents only. In addition several stated that they would perform Electoral Register and Credit agency searches to confirm that the applicant lives at the stated (UK) address.

  By contrast when opening accounts in the Channel Islands and the Isle of Man, while the supporting documentation requirements are extremely demanding, calling for notarised copies of passports, residence visas, local utility bills, other bank account statements or other substantial proof of both identity and permanent address, depending upon the institution concerned, Expatriates are not excluded from opening bank accounts, and it takes only a couple of weeks for the checks to be made.

  Further validation was recently published in the Glasgow Herald. Commenting on Ian Pearson's remarks, (above) Simon Bain wrote that, "All the high street banks contacted by The Herald this week were puzzled by the minister's statement ... The banks all said that this [the need for a UK address] was due to the government's money laundering regulations. The Treasury failed to return calls yesterday, seeking explanation of the minister's comments".[79]

  As the research overwhelmingly shows, and as HM Government must surely be aware, ordinary working people and pensioners, who are British Expatriates, are arbitrarily prohibited from opening UK bank or building society accounts as a direct result of those institutions' interpretation and implementation of their own anti-money-laundering guidelines despite the fact that no such prohibition exists in British law. Furthermore, many are unable to retain existing accounts or legally receive their interest tax free, when they offer an overseas address to their current onshore financial institution.

Institution Account NameNon Res? Status ProvisoInformation Source
AbbeyInstant Access Saver NoUK resident only. 2&idParent=1195853394566&pagename=Abbey/ GSDetalleProducto/GS_DetProducto
Alliance & LeicesterPremier Direct Currrent Account NoYou live in the UK permanently.
Alliance & LeicestereSaver Issue 2 NoA permanent UK resident. We do not accept applications from the Isle of Man or the Channel Islands.
Bank of ScotlandCurrent Account NoYou must be a UK resident with a permanent address in order to open this account. SoleNTF:halifaxCurrentAccountSoleQuickChecks NTF:bfaaac31-524c-4299-b9c4-f3265126b980
Barclays/Woolwiche-savings Reward NoResident in the UK for tax purposes. get=_self&site=pfs
Barnsley Building Societye-Save Online Account NoPermanent UK Resident.
Bath Building Society NoBy visit to branch only and UK official documentary verification of UK address required.
Birmingham Midshirese-Saver Accouny (Issue 2) Monthly Interest NoThis site is intended for use by UK residents only. All products or other financial services accessible through this website are offered in the UK only.
Bradford & Bingley (HM Government owned) Online Savings AccountNo You must be a UK resident (please note: this excludes the Channel Islands and Isle of Man).
BritanniaPremium Saver NoWe can only accept applications from UK residents.
Buckingham-shire Building SocietyChiltern Gold Notice Account NoUK utility bills and official documents only for proof of residence.
InstitutionAccount Name Non Res?Status Proviso Information Source
CahootSavings Account NoBe a permanent resident (for at least the last three years) of the United Kingdom (which excludes the Channel Islands and the Isle of Man) at the time of application.
Cambridge Building SocietyInstant Sapphire Account NoNew savings accounts are restricted to people who live in the branch area.
Capital OneBonus Saver (Issue 3) Account NoWe can only accept applications from private individuals who are 18 years old or over and resident in the UK (excluding Jersey, Guernsey and Isle of Man). SAV3&back=BonusSaverAccount.asp
Catholic Building SocietyWestminster Bond 2 ??Applications in person only—unspecified residence conditions. T/ovr by Chelsea late 2008. Call 020 7222 6736
Chelsea Building Society90-day notice account NoCheque drawn on your personal current account for the opening deposit or as part of the opening deposit. We are unable to accept building society cheques as proof of identity.+ Passport + UK address confirmation.
Cheltenham & GloucesterReward Saver NoWe do not open C&G savings accounts for customers who do not have their permanent home in the UK and, if you move away from the UK, it is important that you notify us.
Chesham Building SocietySave Direct No"Open to savers anywhere in the UK". Proof of UK residence required via: Valid passport, Benefit or pension book or Original notification letter from Benefits Agency. May check electoral roll.
Cheshire Building SocietyEasy Saver Account (mail only) NoUK Residents only—UK credit references agencies and electoral roll used to verify address.
CitibankCitibank Access Account NoAll applicants are UK residents and can provide proof of a UK residential address.
Co-operative BankBalanced savings plan issue 27 NoAny UK residents.,CFSweb/Page/Bank-Savings
Coventry Building SocietyCurrent Account ??Unclear—appears to apply to UK residents of both British and foreign origin.
InstitutionAccount Name Non Res?Status Proviso Information Source
Derbyshire Building SocietyiSaver NoWe will make searches about you at credit reference agencies including information from the Electoral Register.
Dudley Building SocietyDudley Tracker Bond NoPersonal savers resident in the UK.
Dunfermline Building SocietyBase Rate Tracker (Issue 11) NoUK utility bills and UK and EU official documents only, for proof of permanent residence.
Earl Shilton Building SocietyExtra Yield Account NoUK ID and address documents only. Credit agency checks re:UK address. Branch a/c access only.£one
Ecology Building SocietyEco-60 NoUK ID and address documents if credit agency checks unsatisfactory. Postal account only.
EggSavings AccountNo Make sure you're eligible to apply for an Egg Savings Account—you need to be at least 16 years old and permanently resident in the UK.
First Direct1st Account NoAll applicants must have a private telephone and a UK residential address.
Harpenden Building SocietyFreestyle Bond NoUK ID and proof of residence docs. In person or certified (by UK professionals only) copies by post.
HalifaxHalifax Guaranteed Saver Reward NoThis site is intended for UK residents unless otherwise stated.
HSBCFlexible SaverNo Have you been a permanent resident in the UK for at least the last 3 years? =1&SavingsID=24879&BestBuy=1
HSBCAdvance (green) Current Account NoAre you happy for us to undertake a credit register search and credit scoring [NB: impossible for Expats]. Can you provide us with identification and proof of your address and one month's bank statements from your current bank?;jsessionid=0000GXXJXX08hb1EjvUXf1Zn 7xD:12c58t1e1
ICICI Bank UKSuper Saver NoID requirements geared to UK and foreign UK residents. Proof of UK address required via UK public authority docs.£a4 and
InstitutionAccount Name Non Res?Status Proviso Information Source
ING DirectSavings Account online NoOur savings accounts are available to people who are "ordinarily resident" (that is who normally live) in the UK (not including the Channel Islands and Isle of Man) for tax purposes.
Ipswich Building SocietyCounty Bond 5 NoUK ID and address documents only. Credit agency checks re: UK address.
Leeds Building SocietyOnline Freedom 50 NoWe rely upon a combination of checks that include computer system searches, a personal cheque deposit and, where appropriate, documentary evidence—all UK based.
Lloyds TSBInternet Saver NoYou must be a personal customer (16 or over), resident in the UK and have a current account with Lloyds TSB.
Lloyds TSBClassic Current account NoI am a UK resident. I am an EU national OR I have permission to stay in the UK for at least 12 months. [App Form]. 20001655649
Loughborough Building SocietyLoughborough Classic Account NoUK Certified ID and UK utility bills and official documents only, for proof of residence.
Manchester Building SocietyMoney by Mail 90 NoElectronic Checks followed by UK Certified ID and UK utility bills and official documents only, for proof of residence.
Market Harborough Building SocietyOnthedot Easy Access NoUK ID and utility bills or legal documents only.
Monmouthshire Building SocietyEscalator Bonus 90 NoElectronic Search UK ID and address documents only.
NatWeste-SaverNo You need to be aged 18 or over and permanently resident in the UK for tax purposes.
NatWestCurrent Plus NoYou need to be aged 18 or over and permanently resident in the UK for tax purposes.
Northern Rock (HM Government owned)Fixed rate capped bond NoApplication form and ID requirements geared to UK and foreign UK residents. UK address required.
Norwich & Peterborough30-day Notice Account NoUK identity documentation only, in both ID and Address categories.
Principality Building Societye-Saver NoFor tax purposes, be a UK resident.
Progressive Building SocietyCapital Bond NoUK or RoI ID and utility bills or legal documents only.
InstitutionAccount Name Non Res?Status Proviso Information Source
Royal Bank of ScotlandDirect Saver NoYou need to be aged 18 or over, and be permanently resident in the UK for tax purposes.
Scarborough Building SocietyBalance Builder Account NoUK utility bills and official documents only, for proof of residence.
Skipton Building SocietyOnline Access Account NoThis account is only available to individuals who are UK residents.
Standard LifeDirect Access Savings NoYou must be a permanent resident of the UK and aged 16 and over to apply.
Tipton & Coseley Building SocietyHallmark 90 NoElectronic Checks followed by UK Certified ID and UK utility bills and official documents only, for proof of residence.
West BromwichStratus Account NoUK ID and utility bills or legal documents to validate UK address only.£1
Yorkshire Building SocietyRollover Bond NoThe Rollover Bond is available to UK residents and to individuals acting as trustees on their behalf.

NB: Although initially the intention was to survey both current and savings accounts—it soon became evident that the same ID and residence criteria applied to both current and savings accounts within individual institutions. The collection of both sets of data was therefore discontinued and savings account requirements only were collected thereafter to avoid pointless duplication for each bank or building society.


  Sample of typical Building Society Identity and address criteria, frequently used in conjunction with UK credit agency checks and the relevant UK Electoral Roll search—neither of which are applicable to overseas British Expatriates.


    (a) Current full passport;

    (b) Current full UK or EEA driving licence;

    (c) EEA member state identity card;

    (d) Northern Ireland Voter's Card;

    (e) Residence permit issued by the Home Office to EU Nationals on sight of their own country passport;

    (f) Benefit book or original notification letter from relevant benefits agency confirming benefits or state pension;

    (g) Self-Employed in the Construction Industry photographic registration card;

    (h) Inland Revenue tax notification eg tax assessment, statement of account, notice of coding; or

    (i) Shotgun or firearms certificate (Note: not available to Expats per Police.)


    (a) Electoral Register search confirming applicant lives at stated address;

    (b) Recent utility bill or statement;

    (c) Local authority tax bill for current year;

    (d) Current full UK or EEA driving licence (see below);

    (e) EEA member state identity card (see below);

    (f) Local council rent card or tenancy agreement;

    (g) Benefit book or original notification letter from relevant benefits agency confirming benefits or state pension (see below); or

    (h) Inland revenue correspondence (see below).

Clarification sought over Darling's "long hard look", by Nick Mann. The Guernsey Press-5 November 2008. Back

76   Pre-Budget Report, Commons Publications, Hansard, Col 490. 24 November 2008. Back

77   European Union Savings Directive FAQs on HMRC website. Undated. Back

78   House of Commons Icelandic Banking Collapse Debate, Hansard-Thursday 6 November 2008. Back

79   Banks puzzled by minister's comment, by Simon Bain. Glasgow Herald-22 November 2008. Back

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