Recent research reveals many expatriates are unaware of offshore banking and savings, and thus can fall prey to unregulated overseas brokers who are keen to sell products. Clearly, there is a market for educating this group before they leave, says Guy Stephenson
Research carried out recently for Skipton Guernsey among expatriates in Dubai has revealed a startling lack of knowledge about offshore banking and savings at the most basic level.
The research was conducted among a sample drawn from the 400,000 or so expatriates who, according to the Institute of Public Policy Research, leave the UK every year to start a new life abroad. Focus groups covered varying sections of the expatriate community, from teachers to small business owners. Topics discussed started with the planning for the offshore posting carried out in the UK and, following their arrival abroad, what steps expatriates took to arrange their banking and savings strategies once offshore.
Why move offshore?
The reasons for moving offshore are well documented, but changing. Whereas previously most expatriates would admit to wanting to retire earlier or upgrade their house, for many, the motivation now is to try to repay crippling levels of debt built up in the UK over the past few years. Credit card bills of up to £20,000 are not uncommon among new expatriate teachers, for example. But one thing is clear: the central theme that still brings all expatriates together is a financial one, so it is all the more surprising that expatriates themselves remain largely baffled by offshore banking and savings: what it is, who it is for and how it works.
For many, the adventure starts with a trip to their local bank to notify them of the impending move abroad and to ask if this has any implications beyond a change of address.
Among the banks, Abbey refers customers to Abbey International, its wholly owned subsidiary in Jersey. There, callers are routed via a customer relationship centre that is staffed by local Jersey staff, all trained in the detail of offshore banking.
Jane Matthews, head of marketing and business development at Abbey International, says: "All the staff in our Jersey Customer Relationship Centre undergo a three-week training course before they are allowed to take calls from the public. During this period, they will learn all about the basics of offshore banking, from who it is for to what products are available, and whether it is suitable as an option for a potential client. A broad range of topics covering all aspects of opening and running accounts from overseas are covered, so callers are given a clear picture of this aspect of our operations before they leave the UK."
This service theme has also been recognised by the building societies and their offshore subsidiaries, where the reputation for customer handling has often been stronger than among the larger organisations. Alan Bougourd, managing director at Skipton Guernsey, comments: "As a focused operation with a very clear mandate to offer savings accounts and nothing else to expatriates, we have refined our systems and created a deliberately flat organisation, so callers are immediately in contact with a local expert on Guernsey.
"Our website is a key part of our communications strategy, as customers can easily download all the forms they may need to open an account having spoken to us, so the account opening process can be completed quickly and easily."
Expats and regulation
Once abroad, the expatriate may be at the mercy of unregulated advisers, many of whom will not shrink from the sharpest of sales practices. Yet despite all the publicity in the UK surrounding the FSA and the importance of regulation, it seems that ordinary expatriates have very little understanding of this aspect of their financial lives. Knowledge of products, commissions and disclosure of best practice are limited or even non-existent. Many describe a situation where local advisers descend upon potential clients, using high-pressure sales techniques. At this point, a kind of self-preservation gene seems to kick in.
One expatriate teacher in Dubai says: "You know about dodgy financial advisers, especially here. They just want to sell the product and meet their target. And you feel that pressure. Then and there, automatically, it makes you shy away."
For the banks and building societies, reaching out to expatriates once they are living abroad is obviously a far harder task. Time zones and differing working weeks - Sunday is a working day but Friday is not in virtually all of the Middle East, for example - conspire to make the simple act of speaking to expatriates or letting them know about your products all the harder.
For many, the internet has taken over as the main distribution channel, with banks relying on the fact customers will search the web for offshore products and then click on the website of a known brand.
Jane Matthews says: "For us, internet banking is a key part of our offshore banking portfolio. Abbey International's internet banking system offers simple navigation, money transfers between accounts and 24/7 access to your accounts from around the world. We also have a 'Peace of Mind Guarantee' - should you lose any money when using our online services, we will pay you back any loss you incurred from fraud, providing you have taken all the necessary safeguards to keep your account secure.
"The bank offers a range of accounts, including its Gold, Call, Instant Access Savings and Notice accounts. All of these can be managed via the internet banking service, so customers can log on, pay bills and move money between multicurrency accounts from the comfort of their own home."
Many expatriates do not actually get this far, though. Having left the UK with virtually no information on offshore banking, identifying an impartial source once abroad can be difficult. Most will continue to send funds back to their ordinary branch in the UK, unaware of the taxation advantages of specialist offshore savings accounts. Others will simply refer to their UK bank's main website and look for new products.
For the UK-based adviser, the message is clear. This is a largely uneducated but huge market with a good earnings potential. It is a market that is warm to approaches from UK-based advisers, who will tend to be viewed with greater trust than many of their offshore counterparts. Advisers need to go back to basics, though, and find customers before they leave the UK by targeting organisations with a known track record of placing staff abroad on career placements.
- Guy Stephenson is a director of Nacelle.co.uk, a specialist expatriate research and media agency.
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