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Are you sure your bank accounts covered by the €100,000 government guarantee?

By Graham Keysell
This article is published on: 2nd January 2014

Graham Keysell of the Spectrum IFA Group is increasingly concerned about the safety of some expats’ investments.

Keysell says “I am extremely alarmed at the number of people I’m meeting who have been persuaded to invest in ‘Comptes Titres’. These accounts are designed for those who want to actively trade in shares, funds, bonds, etc. in a tax efficient manner.  For whatever reason, people think that they are ‘high interest deposit accounts’ which they are definitely not.”

“Even worse, these people have unwittingly left it to their banks to decide on where the money is invested. This is invariably in bonds in the banks concerned and occasionally in shares in these banks”. He continues, “With the prevailing uncertainty in financial institutions, would any of these people have knowingly lent money to a bank or bought bank shares? You only have to look to what’s happening to bondholders in the Co-op bank to appreciate the danger. ”

With the meagre interest rates on offer for ‘classic’ bank accounts, it is no surprise that investors are attracted by quoted returns which can exceed 5% per annum.  This is what a bank bond may pay out over 5 or 7 years..  The attraction is obvious, but he has yet to meet anyone who understands the risks they are taking.

“I have met elderly widows who have been persuaded to invest their life’s savings in these ‘Comptes Titres’. Nobody has explained to them that these are not covered by the €100,000 French government guarantee. If you read the small print, it is absolutely clear that investors in bank bonds will be the last to be paid out if the bank becomes insolvent.  It is obvious that shareholders are also risk losing some or all of their money. I have no doubt that some people could be financially ruined if they have the majority of their savings in these accounts”

He continues “My own French step-son was advised to invest in such an account. I asked him to phone his ‘counsellor’ at the bank and she assured him that the government guarantee applied. It was only when I showed him the ‘small print’ in the Terms & Conditions that he changed his mind.”

For those people who have invested in these accounts and are worried about their exposure to risk, the solution is not obvious. The price they paid for the bonds is frequently higher than the price they can now be sold for. Keysell’s advice is to check the current value online before taking any decision about whether they want to sell some or all of their holdings in these accounts.

TSG Insurance Services S.A.R.L. Siège Social: 34 Bd des Italiens, 75009 Paris « Société de Courtage d’assurances » R.C.S. Paris B 447 609 108 (2003B04384) Numéro d’immatriculation ORIAS 07 025 332 – « Conseiller en investissements financiers, référencé sous le numéro E002440 par ANACOFI-CIF, association agréée par l’Autorité des Marchés Financiers»

Article by Graham Keysell

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