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Expat Investor : November 2007
Complaint rejected Mrs L had bought the land in her sole name, intending to develop it as her own project. But she had paid the deposit by using a credit card account in her husband's sole name. Even though her husband had allowed her to have an additional card (carrying her own name) on the account -- the account itself was in MrL'snameanditwasMrL--not his wife -- who had had been provided with credit. Because of that, the linked 'chain' of lender, borrower and supplier required for Section 75 to operate was not present, so the Ombudsman could not uphold Mrs L's claim against the credit card provider. Electronic goods bought abroad At the start of his holiday in Spain, Mr J used his credit card to buy a digital camera with electronic accessories. He later told the Ombudsman that towards the end of his holiday he realised the camera was not as good as he had expected, and did not have all the features the retailer had described to him. He therefore returned to the shop and asked for his money back, but the retailer refused and became abusive. Once Mr J got home, he wrote to his credit card provider and asked INSURANCE CLAIM DISPUTES November 2007 EXPAT INVESTOR 19 Fast Facts 99013 Serving expats for more than 16 years J In this issue The UK's Financial Services Authority (FSA) has increased the limit on Financial Service Compensation Scheme (FSCS) cover for deposits to 100% of the first £35,000 of each depositor's claim. The previous compensation limit was £31,700 -- 100% of the first £2,000 and 90% of the next £33,000. Clive Briault, FSA Managing Director of Retail Markets, says, "At a time of market uncertainty it is important for consumers to know their deposits are properly protected. The action we have taken is designed to help reassure depositors with accounts up to £35,000 that they are 100% covered. The Government has indicated that it will propose further changes relating to financial services compensation arrangements in the UK designed to give consumers confidence that their savings and deposits are safe and secure." The UK's Chancellor of the Exchequer, Alistair Darling, has disclosed that he is looking at further ways he can revamp the savings protection scheme. Mr Darling has announced that his department is looking at a US-style system of protection which covers savers' deposits in a collapsed bank by moving the assets into a reserved account and reimbursing savers the full sum within days of any such Compensation upped to cover first £35,000 Investor EXPAT g £4.95/ 7.50/US$7.50 Nov 2007 Bringing advisers and investors together Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Online banking Banks get excited about their online banking developments and projects. Expat labels A chance to bone up on your expat labels and pension rights. Meet the regulators An insight into the finance centres' supervisory role in looking after your money. It pays to bare all Insurance claim disputes and how to win them. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investment 22 Offshore mortgage market Next issue Offshore savings Best money tools Healthcare forum Currency watch 6 14 16 18 4 www.expatinvestor.com Onshore savers, having already proved they can vote with their wallets, have been rewarded by the UK's Chancellor with an improved depositor compensation ceiling. Meanwhile, Expat Investor asks if money market funds are about to have their day? For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Fast Facts 99000 www.expatinvestor.com "There are those that you know you should read, and then there's the magazine you will read." To register for Expat Investor digital edition, visit the website at www.expatinvestor.com Serving expats for more than 18 years crisis. A consultation and study process would examine the following regulatory points. First, what would be the effects of a further increase in the amounts guaranteed? The overall compensatory sum guaranteed for savers, using a US-style system of ring-fencing savers' deposits in the event of a bank's crash, could be as much as £100,000. The Chancellor also wants to introduce changes that would offer depositors greater transparency and prevent financial institutions from obscuring high risk investment on their balance sheets. In addition, any improved regulations would ensure savers understood the risks involved. Until such time as a new regulatory structure and compensation scheme are in place, Fidelity International believes anxious savers could steady their nerves with a money market fund. Money market funds offer similar security and rates of return to cash deposits, says Fidelity International, and allow savers to protect themselves against the risk of a single bank collapse or default by spreading their money across a range of financial institutions. The manager of the Fidelity Cash Fund says he is charged with pursuing the best rate of interest on the highest quality notes issued by banks and other financial institutions. The fund is managed in a treasury style with an AAA rating, the highest credit rating in the market, and, stresses Fideltiy International, has no exposure to riskier investments such as US sub-prime paper. "Money market funds, like any other UK mutual fund, are covered by the Financial Services Compensation Scheme." This scheme differs from the depositors compensation rules, in that it provides each saver with a total maximum payout of 100% of the first £30,000 invested and then 90% of the next £20,000, should the company managing the client's investments go into default. Richard Wastcoat, UK managing director of Fidelity International, tells Expat Investor,"Money market funds should also appeal to those savers who have been unsettled by the credit crunch. These funds spread a saver's money across highly liquid cash-like securities issued by a wide range of financial institutions and top companies and so provide some protection from the collapse or closure of a single financial house." Savers have grown canny over the years, however, and know how to chase a good rate. To which end, long-term savers are aware that rates offered on the money market do not always better the rates offered on term accounts from offshore deposit- takers -- we've even seen cases where no notice account rates are appreciably higher than any rate offered on a money market account comparing a like for like minimum deposit sum. It is worth noting that all Isle of Man deposit-takers comply with the Island's depositor compensation scheme which offers considerable peace of mind to expat savers. Tu rn to page 12 to compare the best rates currently on offer in the offshore market place. OUT NOW! *THE ANNUAL INTEREST RATE QUOTED IS VARIABLE, GROSS AND EFFECTIVE FROM 1ST OCTOBER 2007. THIS RATE IS PAYABLE WHERE NO MORE THA N 3 WITHDRAWALS ARE MADE IN A BONUS YEAR (1ST APRIL -- 31ST MARCH) WITH A RATE OF 6.00% PAYABLE WHERE 4 OR MORE WITHDRAWALS ARE M ADE IN THIS PERIOD. THIS ACCOUNT IS ONLY AVAILABLE ONLINE TO INDIVIDUALS AGED 18 OR OVER AND IS NOT AVAILABLE TO UK RESIDENTS. Maximum balance is £ 1,000,000. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ Br itish Isles. Registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA . With share capital and reserves in excess of £266 million. Copies of our most recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle of Man legislation, eligible deposits made with an Isle of Man office of Bradford & Bingley International Limited ar e covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). This advertisement does not constitute an invitation to make deposits in any jurisdiction to any person to whom it is unlawful to make such an invitation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your personal circumstanc es and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business. %* GROSS P.A. 6.50 eSaver Internet Savings Account . Minimum balance £1 . No hassles . Helps you save . Manage from home 24/7 Available now at www.bbi.co.im/esaver Rising mortgage rates Problems in the UK mortgage market stemming from the so-called 'global credit-crunch' inevitably suggest an imminent rise in the costs of borrowing . Alistair Darling says slowing of house prices will ensure they are based on more realistic financial foundations. He stressed that it is in no one's interests that house price inflation go on rising year in, year out when there is no justification for such rises. To find out more about financial regulations, supervision, protection and compensation on the offshore islands of Jersey,Guernsey and the Isle of Man, turn to pages 16 and 17. for a refund under Section 75 -- saying he had bought the camera on the basis of a misrepresentation by the retailer. The card provider said it was unable to help, so Mr J referred the matter to the Ombudsman. Complaint rejected Mr J was able to argue that Section 75 applied in this case because of a decision of the Court of Appeal in March 2006 that transactions made abroad are covered by Section 75. Pending a final decision on the matter by the House of Lords, this represents the current legal position. During the investigation of the complaint, the Ombudsman asked Mr J some questions about his second visit to the retailer to return the camera. It had noticed from his credit card statement that on the same day he had made another -- larger -- purchase from the same retailer. Initially, Mr J was reluctant to discuss that purchase. Eventually he said that he had bought a more expensive digital camera. He was unable to explain why he had bought another camera from the same retailer he had accused of misleading him about the first camera, and of later becoming abusive. After considering the evidence, we thought it unlikely the first camera had been sold on the basis of a misrepresentation. From what Mr J had said, it seemed more likely that having initially bought a cheaper camera, he had changed his mind and decided he would prefer the more expensive one. He had returned to the retailer hoping for a refund of the cost of his initial purchase when he bought the second camera. The Ombudsman rejected the complaint. "As she had used a credit card to pay the deposit, Mrs L considered that the credit card provider was liable to her under Section 75 for the cost of what she now considered to be 'worthless' land." "He later told the ombudsman that towards the end of his holiday he had realised the camera was not as good as he had expected, and did not have all the features the retailer had described to him."