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Expats stick with offshore banks in spite of poor rewards
| Published: | 28 May at 10 AM |
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A recent survey found that British expats are still making use of offshore banks rather than transferring their cash to foriegn onshore banks in overseas locations.
In spite of scares such as the Icelandic bank failures and a lack of decent rates of interest on deposits, British expats living overseas seem to be sticking with their offshore banks. A survey undertaken on behalf of AES International has revealed that banking offshore is still the most popular way to go, even although the number of providers is falling fast and interest rates are now lower than those of onshore banks in the UK.
Reputable financial advisors working with expats say that choosing a safe jurisdiction and a trustworthy offshore bank is the best way forward for expat financial planning. CEO John Viney warned that insurance bonds and regular savings plans can spell disaster for expat investors due to the high fees charged and the risk of misselling, whereas keeping funds in an admittedly low-interest offshore account at least means the money is safe. Buying investment funds direct, he added, is the preferable way forward for long-term savers.
The poll itself was small, with some advisers questioning its results for that reason. One manager pointed out that savings plans were mostly offered to Brit expats working overseas long-term, adding that most clients were happy to spread their savings and spare cash over various different products and banks. If the host country’s currency is weak or its banks have issues, he said, holding on to an existing UK bank account is the best move.
Given the recent closure of a number of UK-based bank accounts held by expats, the dilemma of where to park your cash is one of the disadvantages of living overseas for an extended period. Retirees having no intention to ever return to the UK are not the high street banking community’s best friends, and even those working in executive positions overseas can well face problems keeping their UK-based bank accounts open. Even so, offshore banking options may not suit many in these categories as offshore regulators are not tied to the same rules as are their eqauivalents in the UK.
In spite of scares such as the Icelandic bank failures and a lack of decent rates of interest on deposits, British expats living overseas seem to be sticking with their offshore banks. A survey undertaken on behalf of AES International has revealed that banking offshore is still the most popular way to go, even although the number of providers is falling fast and interest rates are now lower than those of onshore banks in the UK.
Reputable financial advisors working with expats say that choosing a safe jurisdiction and a trustworthy offshore bank is the best way forward for expat financial planning. CEO John Viney warned that insurance bonds and regular savings plans can spell disaster for expat investors due to the high fees charged and the risk of misselling, whereas keeping funds in an admittedly low-interest offshore account at least means the money is safe. Buying investment funds direct, he added, is the preferable way forward for long-term savers.
The poll itself was small, with some advisers questioning its results for that reason. One manager pointed out that savings plans were mostly offered to Brit expats working overseas long-term, adding that most clients were happy to spread their savings and spare cash over various different products and banks. If the host country’s currency is weak or its banks have issues, he said, holding on to an existing UK bank account is the best move.
Given the recent closure of a number of UK-based bank accounts held by expats, the dilemma of where to park your cash is one of the disadvantages of living overseas for an extended period. Retirees having no intention to ever return to the UK are not the high street banking community’s best friends, and even those working in executive positions overseas can well face problems keeping their UK-based bank accounts open. Even so, offshore banking options may not suit many in these categories as offshore regulators are not tied to the same rules as are their eqauivalents in the UK.
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