Banks must allow ex-pats access to onshore accounts, say MPs

The Treasury Committee has demanded the regulator and banks explain why ex-pats cannot open onshore accounts.

Ex-pats have been forced to deposit money offshore and lost the protection of the Financial Services Compensation Scheme when there was no legal reason for banks to block applications, MPs said in a report on the Icelandic banking crisis.

‘We accept that there is no specific regulation or law preventing the provision of bank accounts to expatriate British citizens, but in practice the supply appears to have been extremely limited,’ the report said. 

The Financial Services Authority (FSA) must identify why so few banks will let ex-pats open accounts, and must improve the service on offer to them, MPs said. The Coventry and Catholic building societies were the only mutual or bank that did not prevent ex-pats opening accounts out of 57 surveyed by Emma Bergh-Apton, a member of the Landsbanki Guensey Depositor Action Group. 

The British Bankers’ Association said ex-pats were treated differently to UK residents because of the higher risk of fraud. 

‘The government, Treasury and the FSA have all chosen to turn a blind eye to this inequitable interpretation of the Anti-Money Laundering Regulation and action is urgently required to allow expatriates equal access to accounts in their home country,’ the action group said in a letter to the BBA. The group also challenge the assumption ex-pats posed a greater risk of fraud.

The Treasury Committee concluded charities who deposited money with failed Icelandic banks deserved to be bailed out by the government while offshore savers and local authorities should not.