With the last few months, and probably much of the coming months being dominated by the coronavirus we’ve spent some time thinking about other matters.
On the cusp of the New Year, we left the European Union and entered a twelve-month transitional period. The notion of the UK’s future relationship with the EU is now starting to make the news again, although this tends to be in a sensationalist click-bait style, rather than in the provision of useful information.
It remains a fact that whilst there are very many mutual advantages to continuing a very close relationship with the EU, the issues (rightly or wrongly) manifested in the referendum result mean that there are some very important key and conflicting areas in which the UK and EU have become ideologically entrenched. It’s also a matter of fact that high-level negotiation is a matter of brinkmanship with the aim of best protecting one’s interests.
We’re not gamblers (it’s not an appropriate pastime for investment advisers!), but, if we were, our money would be on a last-minute, very narrow deal. If we’re right this will create quite a few uncertainties for many of our clients. Whilst we don’t yet have the answers, we thought we’d share some of our questions:
“Offshore” Investments
For most Brits, an ‘offshore investment’ means investing with a UK institution in the Channel Islands or the Isle of Man. As the Isle of Man, Jersey and the Bailiwick of Guernsey are Crown Dependencies, we see no change in the status of those investments.
However, over the last 30 years Dublin’s International Financial Services Centre, a special economic zone has enjoyed spectacular growth as a ‘home’ for offshore investments.
We are uncertain what protection will be available to UK residents who have invested in Dublin domiciled offshore investments following the end of the transition period.
Foreign Banking Licences (savings accounts)
All UK regulated current accounts, savings accounts and Cash ISA in banks, building societies and credit unions are covered to some extent by the Financial Services Compensation Scheme (FSCS) (remember that cover is limited across institutional banking licences, not brands).
However, banks based within the European Economic Area are allowed to sell their services in the UK without being covered by the Financial Services Compensation Scheme. In these instances if the bank failed, we’d have to claim against the home country’s compensation scheme.
We are uncertain what protection will be available to UK residents from EEA compensation schemes following the end of the transition period.
It is reassuring to note that Renault’s RCI Bank have successfully transferred their 75,000 UK clients away from the Bank of France protection scheme into the jurisdiction of the Financial Services Compensation Scheme
European Property Owners
We’ve encouraged Brits with interests in european property to ensure they have valid wills in the same jurisdiction as their property interests; exploiting the European Succession Regulations; effectively allowing British succession rules to apply to their apartment, finca, gite & villa. At the same time, we’ve emphasised the need to ensure that your English, Welsh or Scottish will is restricted to other assets.
We are uncertain if British european property owner’s estates will still be able to benefit from the European Succession Regulations from the end of the transition period, if not, clients will need to urgently address both their UK and their european testamentary instructions.
Uncertainties
We’ve tried to be very transparent in the article about some of the uncertainties we have. We want to raise awareness that beyond who may or may not be allowed fish in the North Sea, there is a potential for change which might have a dramatic impact on our client’s or their families financial positions.
Please do get in touch if you’re concerned by any of these points, or if you’ve thought of some which you think we should share. When the EU/UK negotiating teams have done their jobs and the UK and European Parliaments ratify those negotiations, we’ll make sure we’re fully versed to provide appropriate guidance.
