George brings this to our attention:
The UK Government worked to include language about discrimination in the FATCA IGA.
j) The Financial Institution must not have policies or practices that
discriminate against opening or maintaining accounts for individuals
who are Specified US Persons and who are residents of the UK.
But was that nothing more than window dressing?
National Savings & Investments (NS&I) was established as a people’s bank in order to provide products that had the backing of HM Government;
In 1861, the Palmerston government set up the Post Office Savings Bank – a simple savings scheme aiming to encourage ordinary wage earners to “provide for themselves against adversity and ill health”. We separated from the Post Office in 1969, becoming National Savings. In 1996, we became an Executive Agency of the Chancellor of the Exchequer. NS&I (National Savings and Investments) is now one of the largest savings organisations in the UK, with over 25 million customers and more than £100 billion invested.
One of their products is a simple savings account called Direct Saver. Minimum investment is £1.
*************
Through 30 March 2014, anyone could save through Direct Saver;
What does HM Government do as of 1 April 2014 with this simple and popular savings vehicle? It is available to everyone except…
17 . General limitations. Accounts cannot be:
(a) opened by a person who is either a US citizen and/or a US resident for tax purposes;
(b) opened by a person who is an undischarged bankrupt;
(c) opened by a person under a legal disability otherwise than in accordance with paragraph 16; or
(d) opened by one person on behalf of another otherwise than in accordance with paragraphs 14 and 16, unless the applicant is acting under a valid power of attorney; or
(e) held in trust.
HM Government is taking the lead with instutionalized discrimination against US Citizens,
OR:
Do as we say and not as we do.
Income Bonds and Investment Accounts also offered by NS&I appear to be off limits to US persons now, too. If government-owned financial institutions can do this, the private ones will surely follow. Thanks, Calgary 411, for pointing this out. It won’t do any good (after all, this Chancellor of the Exchequer suggested to The Independent newspaper here in the UK that the UK should perhaps try citizenship-based taxation!) but I will write to him about this discrimination nevertheless.
It’s coming that persons abroad with US taint will be required to wear an armband tastefully displaying the Stars and Stripes when they enter their local FFI.
Well spotted, George and qm.
I thought that NS&I, being a wholly owned government institution, would be exempt from reporting. Sadly, it isn’t. The government itself, local governments and the Bank of England (and its wholly owned subsidiaries) are exempt. NS&I (wholly owned by UK government) and RBS (majority owned by UK government) are not.
Premium bonds, Children’s bonus bonds, fixed interest savings certificates and index linked savings certificates issued by NS&I should still be available as they are “exempt” products and, therefore, not subject to reporting.
@calgary411:
Thank you so much for bringing this to the light of day.
Proof, indeed, of what is happening in our world.(I’m too bitterly angry just now to comment further – it wouldn’t be helpful!) – but wanted to give you thanks for taking this crucial step in providing clear proof of what is happening.
May sunshine now be our best disinfectant…!
@qm,
Can you point me to the details of the independent report? I want to be worried sick about it.
Thanks.
Article 25 of the UK US tax treaty:
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith that is more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, particularly with respect to taxation on worldwide income, are or may be subjected.
Not allowing an American to invest in tax free index linked savings bonds would seem to be a violation to me. This is direct discrimination. I think it might make sense for an American to invest in these even if they are taxed by the IRS.
Not quite sure where to post this.
Prior to the arrival of this post, I spoke at length someone from the UK Equality and Human Rights Commission to discuss the increasing number of share dealing accounts (and, to a lesser extent, share dealing ISAs) that are unavailable to US persons. To cut a long story short, he said that the UK Equality Act can not be used as the basis to challenge UK legislation. That is, the government can choose to implement discrimination if it so wishes. I said that defeated the purposes of having equality legislation but he assured me it was correct. The Human Rights Act can be used to challenge legislation. The most likely avenue would be under Article 8 (right to a private and family life). However, Article 8 is a qualified right and not an absolute right. A challenge would be tested against 1) in accordance with the law 2) necessary and proportionate and 3) for a legitimate aim (prevention of disorder or crime is one of the legitimate aims). He ummed and ahhed when giving me his view. I offered up “problematic” and he agreed with that.
This was the first that he had heard of this and he was going to check if any other counselor had heard anything. The vast majority of their calls are about employment so this isn’t surprising. He was taken aback at the “blatantly unfair” treatment US persons are receiving in the UK. He didn’t really offer up much in the way of concrete advice other than to check out the British Institute of Human Rights Website (bihr.org.uk).
He did, however, point out that the EU Equality legislation could be used to override UK legislation.
I did a bit of digging around and found that there is a discrimination complaint questionnaire from the Government Equalities Office. Do we have any dual UK/US citizens who might want to take the time to send NS&I one of these duly filled out (https://www.gov.uk/government/publications/discrimination-and-other-prohibited-conduct-complaints-questionnaire)? I think it would be stronger coming from a dual. That would rule me out since I’m neither a US person nor British.
Additionally, the minister for equalities is The Rt Hon Sajid Javid MP. Perhaps he would like to hear from a Brit that NS&I is practicing national origin discrimination. He’s a former banker at Chase and Deutsche so he has plenty of experience with financial institutions.
Interesting tool to check FATCA registration of banks. People might get useful stuff from this:
http://www.accountingtoday.com/news/irs_watch/irs-introduces-tool-for-checking-fatca-foreign-bank-registration-70861-1.html
http://samuelclemmons.wordpress.com/2014/01/28/laws-equally-stupid-as-fatca-securities-act-of-1933/
Since 1933, US citizens cannot invest in US companies if not investing via US institutions.
FATCA extends that to anything else.
@Neill
A very interesting tool.
There are 6,264 entities that have been approved for the UK. That is less than 10% of HMRCs estimate of 75,000 FFIs. Good thing there’s plenty of time…
There’s an entry for “The Director of Savings NS&I”. Of course, we now know that NS&I is implementing FATCA “light” (ie without reporting) by banning US persons from non-exempt products.
Some interesting names on there which I assume are trusts, including the 17th Earl of Pembroke (Henry Herbert, who died in 2003) who introduced the world to Koo Stark (courtesy of Wikipedia).
@Edelweiss – Does the person who would challenge National Savings need to be UK? Would an dual EU due? However Irish citizens are differently becoming de facto British citizens after 5 years of residency and cannot be deported after that time. Also Irish citizens can vote automatically in UK General Elections.
Wow. What an opinion on FATCA.
http://www.crossville-chronicle.com/opinion/x1396873082/Stumptalk-The-socialist-shell-game-at-work
@Neill, Wow. Thanks for that link. It gave me the giggles!
…ending with:
Socialist shell game indeed. Thanks, Neill.
@Don
I imagine any UK resident who is a US person can fill out the questionnaire and send it to NS&I. I thought it might be stronger from a UK citizen but UK laws on discrimination are supposed to protect citizens and non-citizens alike. UK residency is, however, a must.
@Edelweiss
On the questionnaire from your link: which box do you check for the protected characteristic that has been violated?
Age? Disability? Pregnancy? Religion? Sex?
That leaves Race. There is no box for national origin. Is NS&I discriminating on Race?
Are we really surprised?
In Canada, “they” say there will be no discrimination, but there will be, and a whole lot of stuff will suddenly be off-limits to duals, their families, PRs and their families, USCs working or going to school here and their families.
What is that they say? If Murphy’s Law doesn’t get you, the law of unintended consequences will?
And it will all be downplayed for the “greater good” bs line.
@George (original post)
You cite:
“j) The Financial Institution must not have policies or practices that
discriminate against opening or maintaining accounts for individuals
who are Specified US Persons and who are residents of the UK.”
I’m flying by memory here, but isn’t this the requirement for FFI’s who wish to be “deemed compliant”?
A quick (AND PARTIAL) search of the IRS data base for GIIN’s: (this is only a quick sample)
Banks: (all listed have a GIIN)
HSBC
Barclays
TSB (Cheltenham and Gloucester)
Lloyds
RBS
Handelsbanken
Virgin Money (Northern Rock)
Building Societies (all listed have a GIIN)
Coventry
Nationwide
Barnsley
Beverley
Chelsea
Nottingham
Skipton
West Bromwich
Yorkshire
Building societies (all listed DO NOT have a GIIN)
Dudley
Derbyshire
Melton Mowbray
Swansea
Dunfermline
UK Government:
NS&I does have a GIIN
If you can find one of the building societies that do not have a GIIN and are attempting to be deemed compliant, and who do not allow US Citizens, then for sure you will have a case.
From the Equality Act 2010:
9 Race
(1)Race includes—
(a)colour;
(b)nationality;
(c)ethnic or national origins.
http://www.legislation.gov.uk/ukpga/2010/15/section/9
@OAP: “That leaves Race. There is no box for national origin. Is NS&I discriminating on Race?”
Apparently so.
https://www.gov.uk/discrimination-your-rights/types-of-discrimination
“It is against the law to discriminate against anyone because of: … race including colour, nationality, ethnic or national origin”
@Edelweiss – One obstacle you’re going to have is actually finding a firm of solicitors willing to take on board your case. In an earlier post I mentioned that I contacted the firm up in Cheshire (I believe) about Iranians claiming discrimination and winning.
However the same firm wouldn’t really respond to enquiries about FATCA.
There seems to be two emerging issues here.
1. Finding a firm that will take on board the case.
2. What are the consequences for a FFI discriminating? Is it just some sort of financial penalty that amounts to a ‘cost of doing business,’ or the ruling means some sort of systemic change where the banks can’t duck the issue and just keep paying out. (is this going to be the same as people suing the banks for bank changes?)
@Don
I contacted Liberty and Privacy International a year ago and both said it sounded like a tax issue and they didn’t have expertise in tax. However, that was before I had my list of firms that ban US persons. The changes to the account terms and conditions make it much more tangible.
Just for the fun of it, I did do a startpage search on “UK barristers born in the US” and there was one. But he specialises in intellectual property. I also found out that the first black barrister in the UK had a creole (not exactly sure what that means, possibly from Louisiana) mother and possibly an American grandfather but he is in his 80s and probably not practicing anymore. With 200,000+ US citizens in the UK, maybe one of them is a barrister specialising in discrimination.
I’m not entirely sure that fighting discrimination is a good thing vis a vis FATCA. If someone wins, maybe the courts force firms to implement FATCA reporting so they can offer accounts to US persons and another billion goes down the drain. There probably aren’t damages involved. I’m just shocked that FFIs didn’t fight this and simply assumed they could discriminate to avoid the investment. They’re really gonna wish they had pursued a different strategy if they can’t discriminate.
And Treasury and other US homelander lawyers insist this discrimination and denial of access to banking services is all
‘anecdotal’.
Right.
A bit off topic but related nonetheless. I spoke anonymously (pay phone) to the CEO of my local credit union where I have been a member for 25+ years. She informed me that even though they are locally owned, they are linked to the Ontario-wide organization and thus are not exempt from FATCA reporting. She was less than sympathetic and put me through to their compliance officer who is a US person. He was very sympathetic but told me that he put everything in his Canadian wife’s name and will begin a “quiet disclosure” beginning this year. I wished him luck but hung up very discouraged. My only hope with them is that my original paperwork lacks US indicia. I will have to move money around now if that’s even possible, or buy some gold, but won’t that leave a paper trail that can be reported? Seems we’re increasingly screwed.
By the way, that CEO thought that the maximum balance is now 10,000 not 50,000. Am I missing something? Sigh…
What concerns me is that even former citizens with CLNs will continue to be reported; though filing 8854 is supposed to log us out of the US tax system, the IRS doesn’t confirm this in writing. I could see mix-ups occurring from the inevitable over-reporting.
Another issue could arise if financial institutions become more like Switzerland and start demanding not only a CLN but proof that tax returns and FBARs have not only been filed but RECEIVED, with threats of closures or freezing assets if these can’t be produced. Very scary.