UK banks slammed for adopting lottery style approach to expats

by Ray Clancy on December 14, 2010

UK banls criticized for policies on expats

Banks are applying a lottery style approach to expats wanting to have a UK account despite the fact that there is no legislation that says British expats cannot keep one open.

Banks though often reduce banking privileges to expats keeping open a UK account and building societies are least likely to allow British expats to retain UK accounts, research shows.

First Direct and HSBC are the most expat friendly while Lloyds TSB tagged is the most likely bank to ask an expat to close their UK account, according to a survey by ExpatMoneyChannel.

It also found offshore accounts are perceived as having high charges and paying poor rates while there is a general lack of understanding and current fear about banking offshore.

The confusion over whether or not British expats can keep open a UK bank account is pushing them out of the safety net of the UK’s regulatory authority and compensation scheme.

The report describes the trend for UK based banks to ask expats to close their UK accounts as ‘worrying’. It points out that there are many practical reasons why a British expat would need to have a UK bank account. These would include the convenience of receiving state or private pensions, particularly expats in a country that does not have an arrangement with the UK to pay pensions directly overseas, such as Greece and Thailand.

In addition, setting up an international account with a UK bank offshore is out of reach for many expats, with an increasing number of international accounts requiring new customers to have a minimum annual salary of £50,000 or savings of £25,000.

And while this requirement is sometimes waived if you are an existing customer, after a couple of years the survey indicates that even these expats are being asked to stump up the extra cash. And when it comes to private pensions, not all companies have the facility to make electronic payments overseas which means for expats living in remote locations where post may be a problem, the safest way to receive pension payments is to set up an overseas electronic transfer arrangements via a UK bank account.

Then there are those expats who may eventually return to the UK and who do not wish to cut financial ties. Indeed, an expat may still have property in the UK that is let out or they may have a mortgage to pay, so having a UK bank account to accept such payments is convenient.

Finally, there is the pressing question of whether or not an expat with financial ties in the UK wants to be placed outside the safety net of the UK’s regulatory authority and compensation scheme.

The research shows that whether or not an expat can keep open a UK bank account very much depends on the bank, how long you have banked with them, whether you retain a UK address and what type of account you have.

‘What’s more, our research shows some banks are taking a lottery style approach as to whether or not expats can keep their UK bank accounts by applying different rules even to the same customer base,’ the report says.

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