ExpatMoneyChannel

The right way to look at insurance

2012-03-01T04:06:00.001-08:00

The trouble with insurance is two-fold. No one wants to spend money on something they may never need and no one wants to think about the outcomes they are insuring against. Death and illness, accidents and injuries, misery and pain. Who wants to take their mind through those doors when looking out onto their own life’s horizon?

 And yet... we have to. Because, death and illness do strike, accidents and injuries do occur, and misery and pain do make themselves felt. Insurance cannot prevent any one of these from happening, but what good cover can do is alleviate the financial burden that besets such outcomes.

Reading the latest statistics from Scottish Provident is what’s forced me to concentrate on this whole area of financial planning. The company’s report on claims made on life insurance policies for the last year show that the average age of claimants was just 56. So much for the national preoccupation with the notion we are all living on to a ripe old age. Digging deeper into these figures, the detail gets more sobering. Nearly one in five claims (18%) paid out were for policyholders aged just 44 or under, a further third (32%) were aged between 45 and 54 years old. The total paid out over 2011 was £41,863,503 in life cover claims with the average claim amounting to £84,744.

I’m not relaying this information in order to scaremonger. But the information does shine a light on a corner where a premature death and illness will cause grief and sorrow, but doesn’t have to tell a story of financial hardship.

Critical illness insurance is another area which expatriates are urged to include in their financial planning. Looking at what Scottish Provident paid out in the first half of last year, we see that the average payment made to claimants was £81,434 with the largest just over £945,000. The age of the average claimant was 47 years old. Scottish Provident says that during this half year, it paid out over £30m for cancer claims, with these accounting for 65% of the total claims paid. Nearly £7m was paid out for heart attack claims, with these making up 13% of all claims.

I’m not relaying this information in order to scaremonger. But the information does shine a light on a corner where a premature death or illness will cause grief and sorrow, but maybe doesn’t have to tell a story of financial hardship.

Scottish Provident says its policies are about putting in place a financial safety net and perhaps that’s exactly the right way to look at the task you may have ahead of you if you don’t already have such insurance cover.

Consider what a difference a financial cushion could bring to yourself and to your family and set about finding the most attractive policy both on terms and benefits. It will be time well spent and, once you’ve shored up that peace of mind, you can forget all about unfortunate outcomes and go back to enjoying your life of expatriate adventure.

The elephant in the room

2011-08-14T05:06:00.000-07:00

Recently, I was asked to talk about the problems facing couples based in wealthy expatriate locations. Two words sprang to mind - ‘money’ and ‘transparency’. It struck me that in too many relationships they are not the most natural bed-fellows.

Secrecy and a refusal to share finances are fairly wide-spread practices. Nationwide’s latest research reveals that whereas couples say they prioritise honesty (43%) and trust (32%) as core values in a relationship, over half (53%) do not pay their salaries into a joint bank account and as many as 22% own up to having accounts they have never revealed to their partners. Hardly surprising then to hear about bickering at one end of the spectrum and full-scale deception over spending and savings habits at the other.

No matter where you are in the world, money is that all too often felt, but never remarked upon, elephant in the room. A state of financial disharmony will often emerge after a couple have landed in some fabulously wealthy location - like an Arab Gulf state - only to find themselves too financially strapped to enjoy such a luxurious playground. Financial embarrassment is the fastest route to feelings of inadequacy especially when you meet other expats who seemingly have it all. They present a front of being sassy, smart and solvent, leaving others unsettled and dissatisfied with their lot. Arguments crop up between couples because when it comes to money there's only so much of it around - you don't row over something you have an abundance of.

Couples pledge a lot to each other before signing the marriage register. They promise fidelity, to care for each other in sickness and in health, and some even bestow upon the other all their worldly goods. I’m afraid most of us would do better to promise less, but do more, especially when it comes to working harder at establishing and maintaining fiscal transparency. Establishing a dialogue where partners can talk frankly and honestly about attitudes and responses to money is crucial. This isn’t about making a case for some type of prenuptial agreement where both parties delineate at the outset what’s their own and what’s shared between them. Talking about money and creating a safe forum where joint decisions on savings, spending and investments, can be made without descending into argument is an ongoing task. In many ways, the best way to approach this is to find ways to ‘workshop’ the subject. Money is a vast area to cover - to do so effectively, requires structure and a common purpose.

Partners who negotiate the money mine-field with both their bank balance and dignity in tact generally do so on a regular basis. They share a regular exchange of views, reactions and responses. Beginners may start off with nothing too formal or too specific. Ask each other about how you see the wealth, or lack of it, displayed in your country of residence. How does it make you both feel? Are you left envious, rueing your lack of a disposable income? Knowing what the other is feeling will create a better understanding between you. Be open to the other’s viewpoint and acknowledge that you are both going to react in different ways and at a different pace.

Don’t go into a first discussion all guns blazing, demanding to see all credit card statements and deposit balances. If you each show the other consideration and acknowledge this is an area for dual control and shared responsibility then you'll be more inclined to listen and in turn be listened to.
Take it step by step, but do make sure the steps are taken regularly. If you can, inject some humour into it all, especially if your frank exchanges reveal that, when it comes to spending versus saving, you are in fact diametrically opposed. Laughing with each other (not at each other) will reduce any nascent urge to panic or blame. Shove the elephant from the room and bask in the warm glow of your new-found transparency.

Why You Can't Take It With You

2011-03-01T08:40:00.000-08:00

We may think a reputation of honesty, integrity and respectability is what defines us. Not a bit of it. What really nails us to our mast is our credit rating score. These days, people, aka consumers, can't consume a single material morsel without this all-important reference. And, virtually every consumption you've made, and how you made it, affects the score that is used to judge you by.

What makes this state of affairs perhaps particularly galling is knowing that this vital rating is not notched up by anyone who actually knows us. The individual who has calculated mine and yours, and made it available for third party consumption, has neither met nor dealt with us on any personal basis. It's all done on hearsay - a kind of creditors' game of Chinese Whispers played by the people who stand behind all your financial requests, pleas, bargainings, payments, and, let's not overlook any non-payments you might have slipped up on even when you may have had a perfectly legitimate reason to do so. Yes, all those creditors have been busy giving a nod and a wink to the scorers every time they've been crossed by someone who has forgotten to pay or who held back a payment due to a query or complaint.

So what do we think of our scores? How would we rate ourselves? I surmise that most of us would mark this up as ten out of ten - after all, if we pay our bills on time and move through our adult lives paying off credit cards in a compliant fashion, why shouldn't it be? If anyone has a nagging feeling that their score card is less than perfect and that might be the reason for a hold-up in being granted credit when requested, then it's a good idea to check yours now through one of the many UK-based credit rating agencies.

Such referencing informing others whether an individual is credit worthy and passing judgement on a customer's character when it comes to financial sense and sensibility used to be the task of our bank manager - this was back in the good old days when the manager really did know their customers.

Now all of this rating and referencing is handled by people you've never met nor are likely to meet and if you did meet them socially your spending/saving/borrowing habits will never be discussed. The credit rating scores are arrived at electronically and it all comes down to a method of number crunching - pure and simple.

This is the system now used by those who control our finances - banks, lenders, and other financial institutions. And just how much harder the whole business is when you expatriate yourself from the shores of the UK. On arrival in a new country, expats are expected to tap into credit lines that will ensure they have a roof over their heads, equip their houses with heat, lighting and furnishings, transport themselves between locations, and obtain handy slithers of plastic to withdraw cash, buy food and other necessary items to live.

The particular problems expats are meeting these days include finding themselves totally out of the local credit extension loop. Because they are newcomers, no-one knows them or their financial history. One of the biggest stumbling blocks is whereas you can pack and take with you virtually every material asset, your credit rating doesn't export that easily. Your score is meaningless in a new country because its system for rating credit worthiness doesn't operate along similar lines to that managed back in the home country.

ExpatMoneyChannel doesn't consider this state of affairs to be fair. So we call on the UK-based credit rating agencies to evolve a system of universal referencing so that British expats can travel overseas with a meaningful credit score readily understood by foreign creditors, financiers and lenders. Such assistance will be the only way expats can take their worth with them.

Well, Whad'Ya Know...?

2010-12-13T03:37:00.000-08:00

What am I going to do about my UK bank account? It’s become a dilemma facing every Brit going overseas, as well as those already living abroad and the many thousands of recent returnees.

For some clear straightforward advice, who better to turn to than that master of plain-speaking, Donald Rumsfeld.

There are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns; there are things we do not know we don’t know.

Now, I know DR didn’t have the plight of the British expat in mind when he coined these few choice phrases, nevertheless his words provide an accurate description of the situation in which all too many expats now find themselves vis-a-vis their banking arrangements.

Let me explain. Back in the good old days before the financial crash of 2008, before even the introduction of draconian anti-money laundering legislation post 9/11, (which has always impacted on the innocent at least as much as it ever deterred the guilty), it was generally deemed expedient for Brits going abroad to close their UK bank accounts, transfer their funds to their banks’ offshore subsidiaries, and then to open a local bank account in their new host country. An advantage of this course of action was that expats were able to prove to HMRC that they were living away from the UK; this meant that they would, in due course, become eligible for non-resident tax status and the financial benefits that came with such a label. So far, so good.

The trouble arose around a specific plank of the new anti-money laundering legislation known as KYC - Know Your Customer, which requires UK banks to identify their customers by, amongst other things, their UK postal addresses. The result was that British expats returning home, but without UK addresses and no longer holding UK bank accounts, were suddenly and peremptorily disenfranchised from the financial system.

The problem has been compounded ever since by just about everyone with a potential bearing on it, including the government and the banks themselves. The most recent HMRC judgement on non-resident tax status has done little to clarify qualifying conditions.

I’m told by the Financial Services Authority that “there are no FSA rules covering this area and the discretion as to whether a UK bank account can still be held open or opened without a UK address lies with each and every bank and what their internal policy and practice are.”

And yet when I knock on the door of the banks themselves, and ask them to explain their policy with regard to allowing a British customer to keep open a UK account whilst overseas, just three are willing to give me a straight answer. The rest either failed to reply, delayed replying, batted the question into touch, or hid behind their compliance departments who had inexplicably put a moratorium on the matter.

Why all the secrecy? Why not address the issue, effect a policy and implement it? Where customer loyalty has been demonstrated, why not return the favour, put the matter on the action agenda and acknowledge an obligation to serve?

You can read the personal accounts of expats who’ve had to do battle on this issue here. And you can read the numerous ways in which they have or will come a cropper for not having a UK bank account at some stage of their overseas’ adventure here. The list is depressingly long and the outcome is always the same - the loyal customer is cut adrift.

Meanwhile, there’s a new socking great boulder placed in the pathway of all returning expats. What happens to an expatriate’s credit rating when he or she is denied a UK bank account? This, after all, is what proves the reliability and steadfastness of an individual to other creditors. That’s one hell of a big known unknown and, as Donald Rumsfeld might say, this could turn out to be a thing we do not know we don’t know.

The right to be clear over forex rights

2010-11-09T04:41:00.001-08:00

The collapse of Crown Currency Exchange has thrown a spotlight on protection for consumers using currency exchange companies. Company collapses are no laughing matter as the 13,000 clients of Crown Currency Exchange can sadly testify. This was the latest financial services company to go to the wall taking with it an estimated £20 million. And the worst news of all, is those 13,000 savers stand little chance of seeing any of their money back. Why? Because foreign exchange companies are not covered by any compensation scheme.

This neglected area of regulatory protection lead ExpatMoneyChannel to conduct a survey of foreign exchange companies to find out more about how these companies are actually regulated and supervised. The results unearthed details and facts that few consumers are aware of.

The main points of the survey found that:
1) There's a significant difference between those currency exchange firms that are FSA registered and those that are FSA authorised which is confusing for consumers.
2) The latest regulations which came into force in November 2009 have not changed the fact that customers of payment service firms do not have access to the Financial Services Compensation Scheme.
3) The fact that only those currency exchange providers offering payment services have to be regulated is a further cause of consumer confusion. Bureaux de change and firms offering travel money services only are exempt from FSA regulation. Such companies need only register with HM Revenue & Customs. Many consumers do not understand the difference.
4) Pre-paid currency cards issued by major banks and building societies in conjunction with currency exchange firms are considered e-money products and are excluded from the Financial Services Compensation Scheme.

The non-standardisation of the rules and regulations is confusing for consumers but one fact that stands out clearly is consumers are being poorly served with the lack of uniformity and information about FSA regulation of this sector. Many consumers would see a FSA logo on a company's website and make the assumption that not only was their money completely protected from loss or theft, but that such funds would be covered by a compensation pay-out were that company to go to the wall.

So how should a consumer set about choosing a foreign exchange service? Click here to read our guide which will help you find out the extent of a company's regulatory obligations. You have a right to be clear over the layers of consumer protection, or lack of them, when placing your money with a foreign exchange services company.

Do the right thing

2010-08-26T05:47:00.001-07:00

Between Angelina Jolie's shoulders are tattooed the words, 'know your rights'. On reading this, I thought what a perfect mantra for expats embarking on a new life in a new country.

And I'm not the only one who's been dwelling on the importance of expats knowing their rights. One of the most important aspects of British Honorary Consul Deborah Hellyer's work in Menorca is to signpost expatriates towards those places on the island where they can find out about their rights via the regular briefings and pamphlets readily available from host country's government departments.

Why is this so important? Because spurning such rights can leave an expat high and dry when emergency situations strike - think in terms of the assistance you'd need if a partner dies or if an injury or illness necessitates hospitalisation.

Ms Hellyer estimates the size of the British expatriate population in her neck of the Spanish woods to be 6,000. But the official figure records only 4,700, which means there are more than 1,000 Brits living in Menorca who have chosen not to register their presence. Why they prefer to remain incognito is something of a mystery. Whatever their reasons they are almost certainly missing out on significant rights and benefits available to them especially in the areas of health and social security. The Foreign & Commonwealth Office (FC) back in Whitehall confirms a similar scenario is repeated in other popular expatriate locations around the world.

By formally registering in a new country, an expatriate and his or her family can become full members of the community with all the entitlements to local health and education systems as well as the other facilities that membership brings. In Spain (and other EU countries with reciprocal arrangements with the UK) expats registering on arrival become classified as 'resident' and find themselves with the same rights and obligations as a Spaniard or other local inhabitant. In the case of Spain, the FCO now has Spanish civil servants working alongside its Embassy colleagues advising on property issues, accessing local health facilities and registering with local authorities.

Of course, there's a flip side to the rights' thing. When you strike out as an expatriate the more you know about the rights of others that happenstance may bring directly in your path, the better. Sadly, far too many expatriate related stories have made headline news because other people's rights have taken precedence - no matter how much actual hard-earned cash has been paid out by an expatriate to own such rights.

Nowadays few expats can be unaware of the land-grab laws which regulate compulsory property purchases in certain regions of Spain - but how many found out exactly how such legalities impinge on the property they paid market-fuelled prices for in the first place? Researching titles before handing over money is the only way to acquaint yourself with the rights of others and so protect your own.

Further east along the Mediterranean Basin there's another island, Cyprus, where many Brits have fallen foul by parting with large sums of money to purchase property only to discover that what they think they own wasn't actually an asset that belonged to the seller in the first place. The rights turn out to belong to locals in another part of the island who were caught up in the north/south divide that occurred during the Turkish invasion way back in 1974. Any Brit entangled in such a purchase hasn't got a legal leg to stand on.

FCO Consular Officer Phil Lord confirms there are currently a hundred thousand disputes involving property deeds in northern Cyprus, some concerning British expats. Many of these have followed the same sorry outcome as that of Linda and David Orams. Back in 2002, this British couple bought a villa in the Turkish northern side of the island. A Greek family, forced into exile, claimed ownership of the land on which the villa was situated. At the start of this year, a British Court of Appeal ruled in favour of the Greek family claim which meant Mr and Mrs Oram were not only required to demolish the villa they paid for but also faced having to pay out a not insubstantial sum in compensation.

Today's property market crisis has also added to the woes of purchases in Cyprus, as Mr Lord confirms, seeing cases where construction companies holding the deeds to a number of expatriates' properties have gone into liquidation leaving the hapless purchasers high and dry with no rights to appeal or receive compensation. What's more, purchasers have fallen foul of mis-selling, bad advertising, double selling, and local corruption. It remains imperative that foreign buyers becoming resident and buying property carry out adequate research to ensure what they are buying is indeed being sold by the rightful owner and that they themselves are legitimate as new owners. Knowing your rights, the sellers' rights and checking out previous owners' rights are all essential practices. As Mr Lord stresses, the key to securing rights is to do your research, much more than you would ever believe necessary to undertake back in the UK, as anywhere overseas means you are operating in an alien environment.

Expats everywhere need to take on board the particular legalities surrounding property deeds and land titles in their host country. In Thailand, for example, property purchasers must include a local person's name on the deeds, whereas in Bulgaria buyers are required to set up a local company before bidding for any property.

You can find out more about relocation rights by watching Deborah Hellyer talk on film here and you can listen to Phil Lord on this podcast.

And a website every expatriate should have bookmarked is the FCO's information pages and country-specific sites accessible via www.fco.gov.uk

Expat campaign to know your bank as well as it knows you

2010-07-14T01:28:00.000-07:00

Thanks to everyone who's filled in and submitted ExpatMoneyChannel's Offshore Britain questionnaire. Your answers and comments will help us campaign for a change to current banking regulations whereby British expats seeking to keep open their existing bank accounts when they move abroad, and/or open new UK bank accounts whist overseas, are barred from doing so.

It seems that whilst many Brits on the brink of moving overseas are told by some UK banks that they must close their onshore accounts and open new ones offshore, other banks are turning a blind eye and allowing pre-existing arrangements to continue. The situation is further confused because, whilst the government maintains that the banks are not legally prevented from offering products and services to British expatriates, the banks claim that to do so would put them in breach of 'know your customer' (KYC) regulations, which clearly state that they can only provide accounts to applicants providing UK postal addresses.

The collapse of the Icelandic banks in Guernsey and the Isle of Man dented the confidence of expats looking to start up a new relationship with a bank in an offshore location, such as one of the three finance centres that make up Offshore Britain, Jersey, Guernsey and the Isle of Man. In many cases, expats first put their toes into offshore waters on a trial basis and closing off the continuity of long-held banking arrangements and relationships early on is neither sought nor welcomed. In fact, there are far too many stories of the whole process of switching to a new bank taking far too long, endless teething problems in re-establishing standing orders and direct debits, and little by way of back-up when the new expatriate needs bank documentation to support a new tenancy application or open an account with a utility company abroad. And then there's the pure comfort factor of leaving savings and money management back on UK soil and familiarity of its regulatory environment. Who wants to turn their back on that? The ideal solution would be for expats, particularly working expats who plan to return to the UK, to keep their UK bank account as well as open an account offshore.

The obstacle lies with the existing KYC anti-money laundering regulation which place stringent demands on the banks to insist on various documentation and practice which proves the bank manager does, indeed, know each customer and their business very well. It is the unhelpful detail in this regulation that has to be challenged, whilst preserving a bank's awareness and understanding of its customers' financial comings and goings, and safeguarding its ability to detect money laundering and other illegal practices.

Our campaign needs your help. To begin with we need a list with examples of the kind of documentation you've been asked to produce to comply with KYC regulation when opening a bank account either back in the UK or overseas (including details you've been asked to provide when moving to an offshore branch of your existing bank). This, plus a note of the kinds of questions you've had to answer will enable us to build a complete picture of current practice. Please also let us know about any occasion when you were turned down by a bank and, if so, on what grounds. What are the banks saying to you, the customer? What documentation or ID do they insist you present to comply with KYC regulation? What services are they saying they can no longer provide you with if you become (or are already) an expatriate?

This campaign is not seeking to get around or transgress the current regulations but it will be appealing for modification that takes into account the expats' plight, highlighting why these rules go so against them. Keep us informed with your responses and we'll keep you informed with what's being reported back to us from the government authorities, the regulator and the banking sector. And if you haven't already filled in your Offshore Britain questionnaire, you can download one here.

Putting my money where my mouth is

2010-06-19T08:43:00.000-07:00

Thanks to everyone who posted replies to my blog of 14th June, Promises, Pledges and a Pile of Protection.

My interview with John Aspden, Chief Executive Officer of the Isle of Man's Financial Supervision Commission, is part of an ongoing research project I've initiated on behalf of ExpatMoneyChannel (http://www.expatmoneychannel.com) across the three islands that make up Offshore Britain - Jersey, Guernsey and the Isle of Man - to explore the options currently available to expatriate savers and investors following the financial crash of 2008/09. Its central theme is, 'where do we go from here?'

The project is completely independent. I stress this because, referring to KSF(IOM) and the Island's depositor compensation scheme, views were posted suggesting that I'd let "that man Aspden" off the hook; I had a "rose-tinted" view of events; some of you went so far as to say I'd written a piece of "cheap" and "shoddy" (someone even said "dangerous") PR for this finance centre.

As far as my personal blog is concerned, strong comment is always welcome; rudeness, however, is not.

If you think I failed to appreciate how deeply many of you feel about this, I'm genuinely sorry for both your loss and your ongoing pain. Assuming you're British expatriates, I write on your behalf - have done so for the last twenty years - and seek to pass on to you the best financial information and advice available in the market place.

One respondent asks whether I was "one of those in the pre-banking crisis days that were extolling the virtues to expats of banking on the IOM and Guernsey?" I wrote then (and still do) that what all savers should be looking for is a consistently good rate payer - and, I'm afraid, that won't be the highest. Again and again I wrote (and still do) that if the return looks too good to be true then in all probability it will be. If extraordinary rates were ordinarily achievable in the savings market, surely other deposit-takers would be offering them, too?

Back in the UK, participants in the Christmas hamper firm Farepak are still waiting for the return of their savings. That collapse happened back in 2006. Farepak's customers saved throughout the year to build up enough vouchers to redeem at the UK's largest retailers for Christmas presents and food. The point being that nowhere in the world will any government guarantee the private purse, whatever the plight of those who've suffered a loss - whether they're hard earning or just hard up. KSF(IOM) depositors are having to wait a very long time for compensation; and Farepak customers are still waiting and still not assured that the pay out will reach the insultingly small sum suggested of 15p in the £1. If you believe that somewhere in the world there's a financial Shangri-la where savers will always be bailed out by a lender of last resort (in other word's the country's tax payers), you're just plain wrong.

And to those of you warning that the Isle of Man is staring at a black hole in its Treasury, can I remind you that the UK is staring at a £176 billion black hole. And what about the black holes in Greece, or Spain, or Ireland, or Portugal?

As a reporter, commentator and author on personal finance for British expatriates, I have two objectives over and above reporting on the various products available in the market place; the first is to de-mystify, by digging beneath the small print and untangling the convoluted lexicon behind which the financial world operates; the second is to empower, so that my readers enter the market place knowing what questions they should have answered before they part with their money.

I know that were I a saver with KSF(IOM) and it was my money that was lost, and I was left stranded not knowing whether or when I would see it back, I would be frustrated in the extreme and not a little frightened.

For my readership not directly involved in the KSF(IOM) imbroglio, however, finding a savings home away from the UK is still an urgent task. The majority of British expatriates are forced to save in an offshore institution because current KYC (know your customer) regulation makes it so difficult to open a savings account back in the UK. What's more, whilst many of those expatriates want to save in sterling, others prefer the US dollar or the euro, to which end they also have to turn towards one of the three centres making up Offshore Britain. All of which is why in my blog, Promises, Pledges and a Pile of Protection, I volunteered where I was putting my money, ie, where my mouth is. I'm broadly supportive of the Isle of Man because, whilst nowhere is perfect, it provides depositors with a safety net of a £50,000 compensation scheme.

ExpatMoneyChannel. com is a bespoke platform for British expats needing to know about financial matters and wanting to talk to others in a similar situation. So, Mark - we'll be dealing with Guernsey shortly - watch this space. Lou, Angela, EV, Tricky, Stuart, are you speaking as expatriates? If so, you have the kind of experience ExpatMoneyChannel and its audience could learn from.

What do you intend to do next with your savings? www.expatmoneychannel.com/node/979
What were the factors that led you to choosing your new deposit-taker? www.expatmoneychannel.com/node/309 and www.expatmoneychannel.com/node/1154
Have you checked your new jurisdiction's financial regulation? www.expatmoneychannel/com/node/645
Do you clearly understand the difference between deposit protection and deposit compensation? www.expatmoneychannel.com/node/1129
And what do you feel now, in this post credit crunch era, about savings rates and investment returns? Your comments will move the debate forward. Stay with our forum, fuel the discussion, share your ideas and your know-how. If you're British expatriates, we'd love to have you on board.

Promises, pledges and a pile of protection

2010-06-14T05:20:00.000-07:00

Go back to 2008 ... it's the visual images that stick in the mind more than the words. The pink and black logo; the meandering queues; the besieged branches; thousands of ordinary savers desperate to withdraw their savings from the once mighty, now seemingly defunct, bank. Northern Rock or financial quicksand?

And then there was Iceland - and that pre-volcanic eruption in its fissile banking sector. The cash had gone up in smoke the way the ash was about to. Ordinary savers left stranded once again. Those of us on the sidelines gawped in horror as our fellow investors faced up to the appalling reality that their nest eggs had gone, vanished, vamoose. They'd been robbed within seconds. Would we be next?

And so it was offshore with the collapse of Kaupthing Singer & Friedlander (IOM). And suddenly expats around the world experienced that same numbing sense of insecurity not knowing what calamitous news they'd be waking up to the following morning. Whose bank would Humpty Dumpty its depositors next? And where, of where, were all the King's horses to help savers ride out the mess they found themselves in? Could any of the great finance houses be trusted? Any statement believed? And it all went on for long enough to compel the rest of us into making panic withdrawals. We scratched around like headless chickens looking for safe havens where none were to be found.

I know from personal experience, because whereas I didn't have have savings with Kaupthing Singer & Friedlander (IOM), I did have some tucked away with another offshore deposit-taker on the Isle of Man. In my case I had a pot of euros and was obliged to go to Offshore Britain with them because no bank in the UK at the time I was looking offered a straightforward euro savings account. And yes, when KSF(IOM) went down, I didn't hang around. I pulled my pot out quicker than any bank manager could say, "one bank collapse doesn't make an industry crash."

This wasn't entirely rational because the reason I'd chosen the Isle of Man over another offshore finance centre in the first place was solely down to the fact that this one offered depositors - the small guys - not just deposit protection, but deposit compensation. Plain and simple. And although I didn't have to suffer the same agony as KSF(IOM) depositors who endured months of insecurity about whether they'd ever see their money back, that situation has now changed; deposits have been restored. So I needn't have worried.

I believe it's time the rest of the expat saving world heard the good news.

Every single depositor with KSF(IOM) qualifying for the compensation scheme (which post collapse was raised from £30,000 to £50,000) has now received that latter sum back. This Island's government proved its maturity and stepped up to the plate by meeting its obligations in full. What's more, the liquidator's work has not finished; there are hopes of going further; the target is to compensate depositors with at least 93p in the £1, whilst hopes remain that eventually the full 100% will be recovered.

So what now? Well, after my recent tour of the Island finding out how the government has honoured its pledges to depositors, irrespective of their nationality or place of residence, and given that my own plans for future spending remain euro-centric, it's time for me to get this particular savings pot back on track. To which end, I'm bringing my next egg back to the Island. My choice is swayed by the one centre that has proved how it behaves when disaster strikes. The Isle of Man keeps to its pledges. As a saver this tells me all I need to know.

And what's my cut off point? It's very straightforward. The regulator guarantees that not a penny less than £50,000 will, in the face of a banking collapse, be recovered for each and every depositor. So, on that premise, not a penny more of that total breaks the ceiling of my deposit with each and every deposit-taker.

The Isle of Man has proved itself by sticking to, indeed improving on, its guarantee to depositors. That's the contract we have as depositors with the regulator. Now all we have to do is interrogate the middle man - the deposit-taker - and to hunt around for the best bargains. Happy shopping!

The True Meaning of a Row of Noughts

2010-04-16T02:25:00.000-07:00

The global financial crisis (yes, we're still in an acute state, even if the banks have moved on) has left this country in debt to the tune of £176 billion. That's using the European interpretation of a billion which is a million million. To write that figure with all of its digits lined up, it looks like this, £176,000,000,000,000. Trouble is, when we type out a row of zeros that long, we tend to lose any sense of its significance. We glaze over the noughts and fail, utterly, to grasp the quantities involved. What does a million really mean, let alone a million million, or a billion, or even a trillion? These are figures way outside our arena of reckoning. They're numbers, yet they don't make sense.

A great explanation, comes from John Lancaster in his excellent book demystifying the credit crunch, Whoops.
Mr Lancaster draws on mathematician John Allen Paulos' illustration, inviting us first to guess how long a million seconds is - the answer is 12 days. Now, with that knowledge, try and guess how long a billion seconds is. I hope you're sitting down because the answer is almost 32 years. The purpose of such mental teasing, of course, is to appreciate the difference between a million and a billion.

These two straightforward sums give us an inkling of just how long a term stretches ahead of us before we, as a nation, can pay off this massive and painful debt.

So, as election fever covers Blighty, we observe the less than edifying spectacle of the three main parties tumbling over themselves to explain to the electorate exactly how they are going to make us pay it all back. Whichever way they cut it, the sum speaks for itself. And to balance the books, each household in the UK would need to cough up £56,000.

We must be ever watchful for increases in taxes and cuts in public spending. We must also watch our backs against stealth taxes: and none more so than the British expat. If there's no party canvassing for your vote, you can rest assured there are no politicians looking out for your interests. But you can also be sure, whoever forms the next government, their aparatchiks will weigh your value in terms of potential tax revenue.

We've been hearing a lot recently about how HM Revenue & Customs has been changing the rules governing residency although it has yet to set out proposed changes in a new rule book. All of which makes it very difficult for expats to ascertain, and so plan for, any tax charges that may be made on overseas income or, indeed, on income drawn, whilst overseas, from a UK source.

Situations such as these suit politicians down to the ground, because if they need to top up any empty coffer with tax from hitherto unsought quarters then a couple of million expats, with a question mark over their tax status, will do nicely. To find out more about HMRC's seeming reluctance to lay down clear rules, listen to Ronnie Ludwig as he spells out the implications for expats on www.expatmoneychannel.com/node/1167

And for those of you out there who don't want to miss your chance to vote, visit www.aboutmyvote.co.uk - it's the site of the independent UK elections' watchdog, The Electoral Commission.

One rule for him and one for the rest of us...?

2010-03-18T05:22:00.000-07:00

What amazes me is how Lord Ashcroft ever got away with being a non-dom for tax purposes in the first place.

Put very simply, your domicile is determined by your roots. The country in which you were born and raised will generally be the domicile that stays with you until you die. Looked at from another angle, your domicile will be the country you most relate to. Expatriates who have lived abroad for decades, bought and resided in foreign properties, paid foreign taxes and never returned to the UK can still be classified as domiciliaries of the UK by HM Revenue & Customs, who will tax them and their estates accordingly.

An expatriate keen to shake off UK domicile status and take up another, must provide a plethora of evidence, direct and circumstantial, to that end. Life-style has to be, and be seen to be, 100% that of the adopted country. Implicit in this course of action is the severing of all ties with the UK, and total immersion in the new country's culture, including, where necessary, its language.

So how can there be any doubt as to the domicile of a man who is a peer of the realm and actively legislates for the rest of us? Just what part of his extraordinary and privileged participation in the UK's governance could possibly be viewed as, to use the jargon, 'disconnected' and 'remote'?

Britain's legal system is one of binding precedent, and any long-term expat with an interest in these matters will have an in-depth understanding of the nuances of the label 'domicile', and the clear distinction in tax status between 'non-resident' and 'non-domicile' - a point which, in the debate about Lord Ashcroft, William Hague seems consistently to muddle. They will have followed the case of Gaines-Cooper versus HM Revenue & Customs as it wended its way through the Court of Appeal towards its landmark ruling.

Despite being non-resident for well over thirty years, the detail of Mr Gaines-Cooper's connections to the UK which caught the taxman's eye included holding a badge at Royal Ascot for 30 years, having a Rolls-Royce or two garaged in the UK, and the payment of fees to a private school in the UK shortly after the birth of a son.

Gaines-Cooper lost his case.

I like to think I'm as imaginative as the next woman, but I doubt even J K Rowling could find a way of camouflaging the domicile of Lord Ashcroft. This peer of the realm's presence and involvement in the UK is plainly evident, not only in his life-style, but in a way that impacts directly on the rest of the population.

If such trifling details as those in the Gaines-Cooper case can stand up as irrefutable evidence of domicile, can someone explain to me how on earth Lord Ashcroft has been getting away with it?
http://www.expatmoneychannel.com/node/1167

Beware shark advisers bearing gifts

2009-12-16T09:21:00.000-08:00

Graham Barnes, International Director with The Fry Group, is warning expatriates to be on their guard against being sold inappropriate savings products. Listen here to my conversation with him and learn how you can avoid being sold an investment pup.

CURRENCY COMMENTARY

2009-10-07T03:26:00.000-07:00

On BBC 2's Working Lunch I'm talking about the impact currency conversion has on the spending power of Brits migrating abroad.