Safe deposit box options in the UK
- 8 minutes read
For most investors, the significant risks and attendant costs of storing valuable assets at home outweigh the convenience of ready access. In the UK that usually means choosing to rent some form of safe deposit box. There are a range of commercial options available, but if you want the best protection it’s important to look carefully at the potential advantages and disadvantages each offer represents. It’s wise to start by considering your own personal priorities: For instance, those who place a higher value on privacy and discretion may choose differently to those expecting maximum convenience.
To help you make an informed decision to suit your personal circumstances, the most common safe deposit box alternatives available in the UK are discussed below:
A standard UK bank safe deposit box
In the UK, the safekeeping of gold, silver and other valuable assets has traditionally been fulfilled by the banks. However, the future availability of any private valuable storage facility in UK bank vaults is open to doubt. Three major UK banks have already withdrawn their safe deposit services, despite the continued demand for boxes, while most others are planning to reduce their support, restrict access to small groups of favoured clients, or exit the business entirely.
The move towards internet and ‘self-service’ banking has prompted branch closures and caused banks to review safe deposit box costs – a service most already heavily subsidise. Though banks still enjoy a reputation for security, in reality, many current bank safe deposit security systems are far from state-of-the art. Furthermore the trending reluctance to continue low-priority safe deposit services makes it less likely banks will commit sufficient funds to maintain and/or upgrade such facilities in future.
Banking customers naturally find it very convenient to arrange their valuable asset storage (usually excluding cash) with a local bank. However, some aspects of such arrangements are actually far from convenient. For example, few UK banks offer insurance on safe deposit box contents. In addition, bank customers must accept they can only access their safe deposit box during normal business hours.
One enduring feature of the British banking system has been its long-established reputation for absolute bank-client confidentiality. UK banks still aspire to uphold this cherished principle and, for instance, will rarely disclose any banking details without a court order. Nevertheless, like financial institutions in many other countries, under the UK’s Money Laundering Regulations, UK banks have a ‘duty to respond to requests for information about accounts and safe-deposit boxes’. This legislation empowers law enforcement authorities and the HMRC tax authority to request details of the ‘holders or beneficial owners’ via a ‘central automated mechanism’.
While traditional banking discretion is still nominally extended to all bona-fide customers, UK banks still require anyone seeking safe deposit facilities to have an active bank account with their chosen bank provider. All such accounts are recorded by the bank, which essentially means an automatic disclosure framework is already in place – leaving the concept of customer anonymity extremely vulnerable to a sudden ‘back-door’ disclosure, without prior notification.
Conclusion: A bank safe deposit cannot guarantee anonymity.
A safe deposit box with a UK precious metal dealer
Storing your gold and silver with a precious metal dealer in a bank-independent safe deposit box is another common storage option. A few UK bullion dealers offer secure safe deposit facilities as a complementary service to their sale of precious metal bars and coins, creating a more attractive single solution for investors.
With a narrower business focus than banking institutions, UK precious metal dealers can usually offer high grade security vaults and premium protective features to secure their own trading stocks and protect the assets of their safe-deposit customers. Every legitimate dealer is regulated by the Financial Conduct Authority (FCA), and must abide by the UK’s AML (anti-money-laundering) rules and the provisions of the UK Data Protection Act. Nevertheless, an individual customer can enjoy a greater degree of privacy due to the absence of any banking-style central reporting framework.
Despite this enhanced anonymity, there are some questions to ask and potential disadvantages a prospective customer should carefully consider:
1. It is important to establish whether any storage arrangement is also subject to an ongoing minimum sales volume or any kind of compulsory purchase obligation.
2. Basic insurance is generally included (typical sum insured is at least £10,000), but this should never be assumed. Blanket cover is mostly arranged in the name of the provider, with no need to identify individual customers. However, it’s always wise to check the details.
3. While some dealers store gold and silver bullion only, others may accept valuables, and cash too, for storage in your non-bank safe deposit box. However, dealers will rarely permit investors to consolidate their holdings by storing any precious metals acquired from a third party.
4. Safe deposit access will once again be limited to business hours, and while most providers will hand over all available keys to the owner, some may only offer a less-private, dual-key alternative.
5. Most dealers offer a choice of payment methods, but this is not universal. If a company insists your rental fees must be paid by direct debit, for example, that means your bank details will also be required and your level of anonymity will be consequently diminished.
- NB: If your chosen dealer offers any kind of financial advice and/or brokerage services to its customers, the business is automatically subject to the same reporting and disclosure regulations as banks and other financial institutions.
Conclusion: With no central reporting, this option offers more anonymity than bank safekeeping.
A safe deposit box with a UK private storage company
While banks see safe-deposit security as a drain on their limited resources, private specialist asset-storage providers invest heavily in state-of-the-art protections they regard as key to promoting customer confidence in their business model. Thus a non-bank safe deposit box with a UK private storage company offers secure, versatile safekeeping of precious metals, cash and other valuables in hi-tech vaults protected by the latest high-security systems. Complementary insurance (with customer anonymity) is often included in the rental price, and storage arrangements are supported by comprehensive and welcoming customer service.
More importantly, asset storage outside the banking system offers far greater privacy because this solution is not subject to intrusive financial regulations. Furthermore, this option also leaves investors entirely free to buy, sell and manage their precious metal holdings as they choose without any dealer influence, ongoing purchase commitments, or quibbles about the amalgamation of investment holdings.
Those sourcing a private safe deposit should consider the following points to clarify the potential advantages and disadvantages of each valuable storage offer:
1. The storage location matters. The best options are often discreet, well-protected but inconspicuous out-of-town sites with a flexible range of storage facilities.
2. Access arrangements must be clear and understood, especially as regards out-of-hours visits (usually by appointment); opportunities for discreet, private viewings; and custody of all available keys.
3. Account administration: Opening a custody account should require no more than supplying the necessary personal details for on-site administration and preliminary credit checks. There should also be a choice of rental payment options. However, do remember to verify there is no compulsory bank account sign-up and/or disclosure of bank details, and no external legal reporting obligations.
4. Insurance should always be discussed, especially if any complementary insurance has unacceptable cover restrictions and/or quotes a sum insured below the value of your stored assets.
Conclusion: This comprehensive option offers the best, and most discreet, protection for your assets.
Safe deposit box alternatives
Precious-metal holdings in particular may sometimes demand different storage treatment, perhaps because of their value, weight, or the amount of physical space required. In such circumstances an ultra-secure vault with dedicated storage space or a separate strongroom facility may be the answer. Many private, non-bank safe-deposit providers can also offer this private-vault space alternative – so the level of privacy offered, and most of the considerations noted above, will still apply.
Even though you will retain direct ownership of your stored goods, it is important to ensure a proper inventory of your assets is prepared and kept up to date. In addition, you should confirm your goods are properly insured and kept in allocated storage. Allocated storage means your goods are readily identifiable and kept separate – i.e. they are never commingled with assets belonging to other people. If you are offered “collective” storage instead, this means your goods are stored collectively (not separate) and you will only be entitled to the return of goods of similar value – i.e. you cannot assume, nor demand, that the precious metals you receive back will be those you originally deposited.
Conclusion: Allocated storage too offers discreet and comprehensive protection for the investor.
UK probate implications for asset storage
Those for whom privacy is an important consideration should be aware of the implications of the UK’s probate law which applies if a safe deposit box owner dies. Any safe deposit box provider will not release the contents to the executors or beneficiaries of any will until the legal probate documents have also been presented. Privacy implications arise here because, in order to establish any potential tax liability, the value and nature of the stored holdings must first be disclosed to the UK tax authority (HMRC) before probate documents are issued.
Regulatory matters
Any UK business offering safe custody services must comply with a range of legal and financial regulations, with strict penalties imposed for non-compliance.
Data Protection
The UK Data Protection Act 2018, replacing the EU’s own GDPR legislation, controls how all safe custody services may store and use your personal data. The legislation also gives you the right to find out what personal data the business stores, and how it is used.
Financial regulation
All businesses providing safe custody services of any kind must be registered with the UK Financial Conduct Authority (FCA). In particular, any registered business must maintain careful customer records and abide by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Essentially this means obtaining background information and verifying any new customer’s identity. It is then the provider’s responsibility to notify the authorities if they observe any suspicious activity.
However, unlike banks and other financial service providers, safe custody providers are not required to maintain, or report to, any central register system.
- NB: Due to the international Foreign Account Tax Compliance Act (FATCA) agreement between the UK and US governments, any US citizen renting a UK safe deposit box associated with a UK bank account may find this triggers that bank’s reporting obligations.
Private specialist providers clearly offer optimal safe deposit box storage. However, bank-independent safe deposit boxes are not only offered in the United Kingdom. So why not consider storage with a bank- and dealer independent provider such as Switzerland’s Swiss Gold Safe? This long-established company offers both safe deposit boxes and private vaults with allocated storage and is a popular safe-haven choice for institutions and private investors alike. Moreover, it is located in one of the world’s most economically and politically stable countries.
Safe deposit box options in the UK: An overview
- In reality, a traditional bank safe deposit box is now very difficult to obtain, and may not guarantee an investor’s anonymity.
- With secure, high-standard safe deposit facilities and no bank-style reporting obligations, precious metal retailers offer greater anonymity than any UK bank.
- Specialist, bank-independent storage providers offering good customer service and state-of-the-art security represent the UK’s most discreet safe custody option.
- Alternatively, some investors may need the additional protection of a secure vault with valuable assets kept in segregated storage.
- All safe custody services are regulated by the UK’s Financial Conduct Authority with banks subject to stricter financial regulation.
- Based in Switzerland, Swiss Gold Safe offer premium safe custody services with optimal privacy and maximum discretion.