Like many of you, we’re sick and tired of the media’s microanalysis of the gloomy state and fate of the global economy. It does nothing more than depress and confuse, with most news channels and newspapers only ever picking up on part of the story anyway. So, we’re not going to add to this news over exposure with this article.
However, it is very important that we take the time out to explain how and why many offshore bank accounts are unprotected or under-protected, so that if you believe you’re affected you can take advice and take action to secure your savings.
The offshore bank accounts we’re going to be discussing are those in what are considered some of the safest, well-regulated havens – namely Jersey, Guernsey and the Isle of Man.
Reading an article in a particularly left-leaning British paper yesterday, we were sickened by the journalist crowing on about all the fat cat tax evaders who make use of such havens. If only they’d taken more time on their research and less on writing something to make themselves feel smug, they would have realised that actually, when it comes to Brits with offshore bank accounts in such offshore jurisdictions, there has been a massive crackdown on tax avoidance by HMRC. By far the majority with accounts in Jersey, Guernsey and the Isle of Man nowadays are simply making use of entirely legal and legitimate perks such as tax deferral, higher rates of interest and institution diversification.
So, if you have a bank account, a savings account or any money on deposit with an offshore bank in the Channel Islands or on the Isle of Man, what do you need to know?
Well, the Council of Ministers in Jersey has only agreed to guarantee the safety of bank deposits of Jersey residents. If you’re resident elsewhere you have no form of local government protection on the island. There is estimated to be up to £50 billion of British taxpayer’s money on deposit on the island and up to £9 billion in Guernsey, so therefore this is worrying news. As Jersey and Guernsey officially fall outside of the EU in terms of many banking rules, the UK’s Financial Services Commission has made it very clear that it does not guarantee any British person’s cash deposits in Jersey, Guernsey or the Isle of Man.
If you have cash on deposit in a bank in Jersey or Guernsey you are strongly advised to seek advice about your best course of action, as you may be 100% exposed on that money.
When it comes to the Isle of Man, things are different and slightly more positive! The Isle of Man guarantees up to 100% of the first £50,000 of net deposits that one has on deposit with a single institution. Therefore, if you have more than one account with the same institution, only £50,000 is covered. However, if a bank failed you could wait many, many years to see your money. This is because the compensation scheme on the island doesn’t hold any money in reserve, rather it would approach institutions on the island at the time of a bank failure for a compensation payout. And because they can only take £250,000 per year per institution, it could take many years for the government to raise sufficient compensation to pay out to all affected account holders from the failed institution!
As you can see, at a time like this one really does need to question all of the guarantees and securities in place on even the most basic bank account. If you are worried, seek advice. Do not leave it to chance because after all, your cash deposits are meant to be your lowest risk level of investment within any portfolio.