FSCS & offshore bonds

T_Smith

Interesting note from Standard Life yesterday about FSCS protection not applying to their bonds domiciled in Ireland following Brexit.

arongunningham

I asked this question to another provider yesterday, the question being on IOM vs Ireland. What struck me is that the SLI email mentions UK a lot, and IOM is also not in the UK:

Standard Life International are Only Based in Dublin . They have NO IOM business.

When Brexit finally happens UK resident policyholders with Dublin Bonds will no longer be covered by the UK FSCS should anything happen to the Dublin provider.

With the IOM offshore jurisdiction, there is no Brexit Implications. It is business as usual . Today, IOM has its own investors compensation scheme which if this were to fail then clients are eligible to fall back on the UK FSCS.

So in summary going forward Dublin based Bonds , No access to Investors compensation . IOM based bonds , up to two forms of protection , IOM own scheme and UK FSCS.

There is supposed to be a fail safe where every UK investor who received advice from an FCA regulated adviser, has FSCS protection, but this has never been tested.

I think Dublin bonds are done. The VAT saving (when using a DFM) isn't worth the risks.

Suse1969

Agree. I'd been on the FCA webinar and didn't pick this up. Funds yes, bonds no.

parawhat

Just had this through from Utmost this morning, which supports what's been said above.

DanAtkinsonUK

Thanks @parawhat that's really helpful

DanAtkinsonUK

The VAT exemption continuing comment is interesting. Has anyone else heard about this?

arongunningham

My understanding is that the VAT exemption is an 'ad-hoc' deal that Ireland have provided to entice investors.

It's unrelated to Brexit but the feeling is that the chances of the offer being withdrawn will be increased.

DanAtkinsonUK

My Utmost consultant has sent me the attached technical sales briefing from their website. As @arongunningham says, it's an exemption granted by the Irish Revenue / Central Bank of Ireland. Need to keep our ears to the ground in case this changes, but no whispers I gather...

PS. They are also writing directly to clients (not about the VAT, but about the other points in the doc @parawhat shared.