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
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
bankwith whom I had been a customer for over 30-yearsthat
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 documentationall notarisedwhich 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, twoKaupthing 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 Groupstogether 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 tooafter 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
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".
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 taxeswithout contributing to the UK
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
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
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
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
British Expatriates account for the largest
group representing 49% of depositors. These fall into two campsthose
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 hardnot 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.
UK ONSHORE BANK
Economic Secretary (Economic and Business),
HM Treasury, and also Parliamentary Under-Secretary (Economic
and Business), Department for Business, Enterprise & Regulatory
ReformMr. 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".
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
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
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.
SURVEY OF 57 UK ONSHORE BANK AND BUILDING
SOCIETY ACCOUNTS AND THEIR AVAILABILITY TO EXPATRIATE BRITISH
CITIZENS BY EMMA BERGH-APTON
||Account Name||Non Res?
||Status Proviso||Information Source
| Abbey||Instant Access Saver
||No||UK resident only.
||http://www.abbey.com/csgs/Satellite?c=GSDetalleProducto&cid=119585341659 2&idParent=1195853394566&pagename=Abbey/ GSDetalleProducto/GS_DetProducto
|Alliance & Leicester||Premier Direct Currrent Account
||No||You live in the UK permanently.
|Alliance & Leicester||eSaver Issue 2
||No||A permanent UK resident. We do not accept applications from the Isle of Man or the Channel Islands.
|Bank of Scotland||Current Account
||No||You must be a UK resident with a permanent address in order to open this account.
||https://www.bankofscotlandhalifax-online.co.uk/Apply/HalifaxCurrentAccount/NewUser/QuickChecks.aspx?PSF=HalifaxCurrentAccount SoleNTF:halifaxCurrentAccountSoleQuickChecks NTF:bfaaac31-524c-4299-b9c4-f3265126b980
||No||Resident in the UK for tax purposes.
|Barnsley Building Society||e-Save Online Account
||No||Permanent UK Resident.
|Bath Building Society||
||No||By visit to branch only and UK official documentary verification of UK address required.
|Birmingham Midshires||e-Saver Accouny (Issue 2) Monthly Interest
||No||This 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 Account||No
||You must be a UK resident (please note: this excludes the Channel Islands and Isle of Man).
||No||We can only accept applications from UK residents.
|Buckingham-shire Building Society||Chiltern Gold Notice Account
||No||UK utility bills and official documents only for proof of residence.
||Non Res?||Status Proviso
| Cahoot||Savings Account
||No||Be 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 Society||Instant Sapphire Account
||No||New savings accounts are restricted to people who live in the branch area.
|Capital One||Bonus Saver (Issue 3) Account
||No||We 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).
|Catholic Building Society||Westminster Bond 2
||??||Applications in person onlyunspecified residence conditions. T/ovr by Chelsea late 2008.
||http://www.catholicbs.co.uk/pages/invest-westbond2.html Call 020 7222 6736
|Chelsea Building Society||90-day notice account
||No||Cheque 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 & Gloucester||Reward Saver
||No||We 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 Society||Save 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 Society||Easy Saver Account (mail only)
||No||UK Residents onlyUK credit references agencies and electoral roll used to verify address.
|Citibank||Citibank Access Account
||No||All applicants are UK residents and can provide proof of a UK residential address.
|Co-operative Bank||Balanced savings plan issue 27
||No||Any UK residents.
|Coventry Building Society||Current Account
||??||Unclearappears to apply to UK residents of both British and foreign origin.
||Non Res?||Status Proviso
| Derbyshire Building Society||iSaver
||No||We will make searches about you at credit reference agencies including information from the Electoral Register.
|Dudley Building Society||Dudley Tracker Bond
||No||Personal savers resident in the UK.
|Dunfermline Building Society||Base Rate Tracker (Issue 11)
||No||UK utility bills and UK and EU official documents only, for proof of permanent residence.
|Earl Shilton Building Society||Extra Yield Account
||No||UK ID and address documents only. Credit agency checks re:UK address. Branch a/c access only.
|Ecology Building Society||Eco-60
||No||UK ID and address documents if credit agency checks unsatisfactory. Postal account only.
||Make sure you're eligible to apply for an Egg Savings Accountyou need to be at least 16 years old and permanently resident in the UK.
|First Direct||1st Account
||No||All applicants must have a private telephone and a UK residential address.
|Harpenden Building Society||Freestyle Bond
||No||UK ID and proof of residence docs. In person or certified (by UK professionals only) copies by post.
|Halifax||Halifax Guaranteed Saver Reward
||No||This site is intended for UK residents unless otherwise stated.
||Have you been a permanent resident in the UK for at least the last 3 years?
|HSBC||Advance (green) Current Account
||No||Are 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?
|ICICI Bank UK||Super Saver
||No||ID requirements geared to UK and foreign UK residents. Proof of UK address required via UK public authority docs.
||http://www.icicibank.co.uk/savings_faqs.html£a4 and http://www.icicibank.co.uk/current_account_applynow_documents_guide.html
||Non Res?||Status Proviso
| ING Direct||Savings Account online
||No||Our 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 Society||County Bond 5
||No||UK ID and address documents only. Credit agency checks re: UK address.
|Leeds Building Society||Online Freedom 50
||No||We rely upon a combination of checks that include computer system searches, a personal cheque deposit and, where appropriate, documentary evidenceall UK based.
|Lloyds TSB||Internet Saver
||No||You must be a personal customer (16 or over), resident in the UK and have a current account with Lloyds TSB.
|Lloyds TSB||Classic Current account
||No||I 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].
|Loughborough Building Society||Loughborough Classic Account
||No||UK Certified ID and UK utility bills and official documents only, for proof of residence.
|Manchester Building Society||Money by Mail 90
||No||Electronic Checks followed by UK Certified ID and UK utility bills and official documents only, for proof of residence.
|Market Harborough Building Society||Onthedot Easy Access
||No||UK ID and utility bills or legal documents only.
|Monmouthshire Building Society||Escalator Bonus 90
||No||Electronic Search UK ID and address documents only.
||You need to be aged 18 or over and permanently resident in the UK for tax purposes.
||No||You 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
||No||Application form and ID requirements geared to UK and foreign UK residents. UK address required.
|Norwich & Peterborough||30-day Notice Account
||No||UK identity documentation only, in both ID and Address categories.
|Principality Building Society||e-Saver
||No||For tax purposes, be a UK resident.
|Progressive Building Society||Capital Bond
||No||UK or RoI ID and utility bills or legal documents only.
||Non Res?||Status Proviso
| Royal Bank of Scotland||Direct Saver
||No||You need to be aged 18 or over, and be permanently resident in the UK for tax purposes.
|Scarborough Building Society||Balance Builder Account
||No||UK utility bills and official documents only, for proof of residence.
|Skipton Building Society||Online Access Account
||No||This account is only available to individuals who are UK residents.
|Standard Life||Direct Access Savings
||No||You must be a permanent resident of the UK and aged 16 and over to apply.
|Tipton & Coseley Building Society||Hallmark 90
||No||Electronic Checks followed by UK Certified ID and UK utility bills and official documents only, for proof of residence.
|West Bromwich||Stratus Account
||No||UK ID and utility bills or legal documents to validate UK address only.
|Yorkshire Building Society||Rollover Bond
||No||The 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 accountsit 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 searchneither 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
(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
(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);
(h) Inland revenue correspondence (see below).
Clarification sought over Darling's "long hard look",
by Nick Mann. The Guernsey Press-5 November 2008. Back
Pre-Budget Report, Commons Publications, Hansard, Col 490.
24 November 2008. http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm081124/debtext/81124-0004.htm0811246000002 Back
European Union Savings Directive FAQs on HMRC website.
Undated. http://www.hmrc.gov.uk/esd-guidance/faqs.htm Back
House of Commons Icelandic Banking Collapse Debate, Hansard-Thursday
6 November 2008. http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm081106/debtext/81106-0020.htm08110644000001 Back
Banks puzzled by minister's comment, by Simon Bain. Glasgow
Herald-22 November 2008. Back