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Banking for newcomers to the UK

Wednesday December 20, 2006

Mark King

Great Britain ? and London in particular ? has long been a popular destination for Antipodean gappers and workers, as well as those from South Africa, but it?s not all plain sailing when the arrivals begin settling in.

Guardian Abroad has heard of a number of South Africans who have recently found trying to open a bank account in the UK particularly inconvenient.

During the last decade the number of South Africans arriving to work in Britain each year has rocketed from around 7,700 in 1993 to 25,500 in 2003. Figures for those arriving from New Zealand and Australia tell a similar story. Unfortunately, the UK?s financial services providers have not responded well to this rising trend.

It remains notoriously difficult for those coming to the UK to open a bank account, with many South Africans facing the added burden of having to hurdle the Afrikaans/English language barrier.

Catch 22

Kathryn Barnes, a 25-year-old PA from South Africa, says she immediately encountered a personal finance ?vicious circle? when entering the UK in 2004. ?I had a job lined up for when I got to London,? she says, ?but almost instantly had a problem opening a bank account. I crashed at a friend?s pad with a view to renting a flat in a couple of weeks.

?I?d been working for two days when I tried to open a bank account, which I needed to get paid, but because I had no proof of address, no one would let me open one. Even worse was that I couldn?t find a landlord who would give me a flat without proof of me receiving a pay cheque. But I couldn?t get paid because I didn?t have a bank account. It was a nightmare.?

Barnes only opened an account after her employer wrote a letter to its nearest bank recommending her as a customer, but many find themselves stranded in a similar difficulty for longer. This is something that may even be on the increase with more stringent money laundering regulations (meant to guard against terrorism, among other things). These make proof of address and other identification even more crucial when opening a bank account, obtaining credit or taking out an investment such as an Individual Savings Account (Isa) or a stock market trading account.

Michael Slater, a 26 year old electrician who came to the UK from South Africa in February last year, says he was also greatly inconvenienced upon arrival.

?To open an account I had to get a letter saying I was permanently employed,? he says. ?Then I had to get a letter from my landlord, and then there was a problem faxing my passport details. This took a month, which was annoying because in the meantime I was being paid by cheque, which I had to cash at a money exchange, losing money in the process.? Slater eventually plumped for a LloydsTSB worldwide account because he wasn?t sure how long he would be in Britain and wanted to keep his money in Sterling even if he moved to another country.

Banking in your own language

But had Slater known about a pioneering service on offer from Barclays Bank, he says it would have helped. The bank has installed an Afrikaans-speaking ?designated customer service adviser? in its Wimbledon branch to assist South Africans in the area.

A Barclays spokesperson says the service is proving popular. ?There was a definite need for it,? she begins. ?Wimbledon is home to many South Africans and we also wanted to tap into those communities in surrounding areas such as Southfields, Wandsworth and even further afield such as Earl?s Court. We know as much as anyone the problems South Africans can experience when trying to open an account and there are many differences between the banking system over there and in the UK. Ultimately, we?re trying to demystify the process and convince South Africans, as well as those from Australia, New Zealand and elsewhere, that it won?t be as bad as they think.?

Potential newcomers to the UK should try and organise an account before they leave. Those who can sign with an agency might benefit from extra help. For example, the International Teachers? Network (a recruitment company that places qualified teachers in schools in England) will give South Africans a referral letter that, together with an original bank/credit card statement from their local bank, credit union or building society, will allow them to open an account. The agency might even be able to pre-arrange a UK bank account before they leave home.

Also, check whether your home bank has an affiliation with a UK bank as this can make the process smoother when you arrive. And be sure to pack/bring as much documentation as possible ? must-haves include a passport, driver?s licence and if possible a birth certificate, as well as evidence of your UK address (if you have one) such as a utility bill. It?s also worth packing an original bank/credit card statement from home that is dated within the last three months.

Your employer can recommend you as a customer to their bank in writing (which should also cover the proof of address) but this means you would have to bank with your employer?s favoured institution. Students should visit their student union welfare officer for information on how the college can help them with their financial affairs ? they usually have links with all the local high street banks and building societies.

A little light tax evasion

But remember, it can take two weeks at the earliest before your account is operational and many arrivals find it takes as long as five weeks, so be financially prepared. There are tax implications. If you?re non-resident, the only UK tax you?ll usually pay is the tax deducted before you get the interest. If you?re also ?not ordinarily resident? (you normally live outside the UK), you can get your interest without tax deducted by giving form R105 to your bank or building society. In either case, if tax has been deducted from interest, you might be able to claim a refund against UK tax allowances using form R43.

For a list of tax allowances available to overseas nationals who are not ordinarily resident in Britain check out the government?s DirectGov website at

If you want to obtain a credit card, you might have to wait until you have been resident in the UK for six months or more, depending on the bank.

Finally, always remember that no matter how difficult it might be to open a UK account, it is your money you are about to deposit, so you should always look at the interest rates on offer and try the bank paying the highest. Be sure to also check building societies ? popular examples include Nationwide Building Society (, Birmingham Midshires (, and Chelsea Building Society (

The major UK banks are HSBC (, Lloyds TSB (, Barclays (, NatWest ( and Royal Bank of Scotland (

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