Living in France U.K. banks will not accept investments !!!! Why ?

[lesfavets]

We have sold one property and purchased another in France and are left with some monies we would like to invest on a 3 year fixed rate annual payments of interests and have been viewing various U.K. banks who are offering a little more then here in France but !!  when we approach them to open an account , all the high street banks we have spoken to advise us that because we do not live in the U.K. nor have a U.K. address, we are not able to invest in their offers.  We have two account with U.K. banks but neither of them are able to accept us for their fixxed rte investment facilities.  I can't believe tht they are not prepared to accept our monies, it is not as if we are borrowing from them but offering them additional monies to be able to ue for offering to others at higher rtes then they are offering investers.  Seems daft to me!!! Any simple reason why this is so ?

Regards lesfavets ( Royston )

p.s. we are English !!!!!!!!!!

[woolybanana]

Try Channel Islands or IOM

[AnOther]

Whilst there are no laws preventing UK banks and other institutions from opening accounts for non residents their internal policies, mostly driven by the need to establish identities and to complying with money laundering rules, mean that they will not accept applications.

If you have an A/C with Nationwide and have online banking with them then there is a loophole for investing (I use the word guardedly) in their fixed term bonds whereby if logged in then on the application you are not asked to confirm that you are a UK resident as you would be if you applied on their ordinary public web site.

[woolybanana]

Just out of interest, isn't it discriminatory to refuse to accept customers from the EU?

[Russethouse]

Probably not if they don't supply the required paper work

[Sprogster]

The UK banks direct their expat customers to their Channel Island or Isle of Man operations. (Nationwide are in the Isle of Man).

It is nothing to do with know your customer ID requirements that are exactly the same in the UK or the Channel Islands or IofM, but to do with paying interest gross. As most non UK tax resident clients don't want UK witholding tax deducted at source, which UK based banks are required to do.

Some UK banks will insist on transferring existing customers to their IofM or Channel Island operations, if they become non UK resident and most will insist if a new customer.

In theory UK based banks can pay interest gross to expats, but they choose not to for retail customers, as the UK admin is time consuming and the tax liability remains with the bank, if the client turns out to be UK tax resident.

[AnOther]

[quote user="Sprogster"]It is nothing to do with know your customer ID requirements.........but to do with paying interest gross. As most non UK tax resident clients don't want UK witholding tax deducted at source, which UK based banks are required to do.[/quote]That is perverse as it's saying that it's the customers who don't want accounts and not the banks that don't want their business !

[quote user="Sprogster"]In theory UK based banks can pay interest gross to expats, but they choose not to for retail customers, as the UK admin is time consuming and the tax liability remains with the bank, if the client turns out to be UK tax resident.[/quote]In practice some will happily pay gross if they receive the proper justifying paperwork but if this were the reason why would they allow existing customers to retain their accounts after they have become non resident ?

[Sprogster]

AnOther, as I currently work in finance in the C.I this is one area I am au fait with.

Most UK based banks do indeed require existing retail customers to move their accounts to the C.I, or Isle of Man, if they become non UK resident and want to receive bank interest gross. For those banks that don't, it probably comes down to the admin cost for the bank in moving an existing customer, whereas there is no cost in requiring new expat customers to go offshore.

Also for most UK banks it is just not cost effective going through the paperwork to prove if a retail client is non UK resident, especially in the current low interest enviroment, where the profit margins on providing deposit services are minimal.

The British banks in the C.I and IofM focus on expat customers and usually offer a far better range of multi currency services, so for many customers it could be a sensible option.

[sunny]

Hi lesfsvets,

One option could be to invest your sterling in a French multi-currency account. We bank with HSBC in France and they often have good investment options for dollar and sterling investments.

[AnOther]

I often wonder why people are so keen to invest in sterling when they live in France and need Euros.

What is the use of earning say 3% when it can be wiped out in an instant, and more, by daily glitches in the £/€ exchange rate.

Of course it can go the other way but if you have tied your sterling up in a fixed term instrument, which you would have to do to get any sort of worthwhile rate, you won't be in a position to take advantage of it.

Personally I prefer to keep my sterling fluid and transfer it into Euros when the rate is favourable.

[lesfavets]

Thank you all for your comments, one reason we wish to invest in stirling, is because we want to spread our investments some in euros and some in stirling, the euro could well be having trouble in the future so we want to ensure we have a stand by currency.  Have pm one or two of persons with their inputs here, once again : Thank you
les favets ( Royston )

[Mrs Trellis]

I don't understand why people can't invest in a UK account and still move money over when they think the exhange rate it better.

Also, I've a feeling that the offshore accounts don't have the protection that UK banks have in case they go under?

[Sprogster]

The Channel Islands and Isle of Man now have comparable depositer protection schemes to the UK.