YouGov and The Times newspaper have run a poll in the last few days asking people why they thought Britons might hold Swiss bank accounts.
76% of those surveyed believe that Swiss bank accounts are primarily for “underhand reasons”. Just one in 10 believe they do it for “legitimate reasons”.
This poll was prompted by last week’s BBC Panorama programme, entitled ‘The Bank of Tax Cheats’, amongst other similar reports, which triggered a firestorm against HSBC.
Being asked by reporters on my opinion, I was a part of that groundswell of condemnation against the bank, sparked by claims that it helped wealthy clients evade tax using hidden accounts in Switzerland.
Yet I am convinced – and also concerned – that the findings of this survey were perhaps unduly influenced by Panorama, and the other high profile reports into HSBC’s Swiss operations, many of which did little or nothing to inform that offshore accounts are not illegal. Indeed, in my view, some reports have actively implied that this is the case.
As chief executive of deVere, a company which has a significant presence within the international financial services sector, and as someone who has had Swiss bank accounts, I think it’s time the balance was redressed.
There are, of course, many illegitimate motivations why people would keep their money offshore. But there are as many, if not more, bona fide ones.
For instance, a high number of our 80,000 mainly expatriate clients have offshore banking facilities simply for convenience. Naturally, expats need a bank account from which they can manage day-to-day expenses and larger financial commitments, such as school fees.
An issue of morality?
An offshore account – which is simply an account in a nation other than the one in which the person currently lives – will typically provide centralised, secure, easy and international access to their funds no matter where they live and no matter to which destination the individual moves to in the future. An expat’s life is usually fairly transient, meaning this is an important consideration.
Another major ‘plus’ that offshore accounts present to internationally-mobile people is that they offer a wide choice of multicurrency savings and investment vehicles.
In my experience, and in that of the majority of our clients, international banking offers a more personalised and more efficient service. One of the most common complaints made against high street banks in the UK, for example, is that it is difficult to speak to someone and/or the same person due to the use of automated telephony services or call centres.
Typically, banking offshore in places like Switzerland, this is less of an issue as you will be able to speak to a client relationship representative who will be empowered to help you with your transactions and informed to deal with your queries – and often there’s an established ‘out of hours’ service too.
Offshore bank accounts are also often used by individuals who have temporarily or permanently lost faith in their own country’s banking sector or economy, such as in times of a serious recession, or by those who live in a politically unstable nation.
But, of course one of the biggest advantages of banking offshore are the potential tax efficiencies. An offshore account will usually be in a comparatively low-tax jurisdiction and tax burdens can often be legitimately mitigated. This helps offshore account holders to grow and maximise their wealth more effectively.
While there are many who can legitimately reduce their tax liabilities by banking offshore, those who are required to declare assets and pay tax must do so – and ignorance of the law is not a viable excuse for not paying any of these due taxes.
As such, as long as any tax requirements are met, holding an offshore account is entirely legal and, in many cases, more convenient and financially sensible.
There are, of course, those who will insist that offshore accounts are immoral. However, if you’re legitimately using offshore financial services, and any required taxes are paid, they cannot be ‘immoral.’
This is because tax is a legal impost and therefore cannot be an issue of morality. It is individuals’ duty to comply with the law and organise their financial affairs so as to pay what is required by law – no-one is expected to pay more than this.
The international financial services industry plays a vitally important role in the contemporary and increasingly globalised economy. Stakeholders in this sector must now work harder to ensure that the alleged rogue actions of a few do not damage the good, and legal, work being done.
