The ABI has held crisis talks with the US State Department and the Internal Revenue Service after it emerged that data protection legislation will prevent UK providers from complying with complex US disclosure rules.
Last week, the Investment Management Association issued a warning that providers could be hit with a 30 per cent withholding tax charge if they fail to comply with burdensome Foreign Accounting Tax Compliance Act disclosure rules.
Under the rules, providers will be forced to identify US accounts and report annually on the account ownership, balances and amounts moving in and out. However, the ABI is concerned that strict data protection laws will prevent providers from fully complying with the rules.
An ABI spokesman says: “It is a major compliance cost and we are seeking to prevent its impact on UK and other EU insurers. Insurers cannot simply hand over personal data to a third country without the clearance of the customer concerned.”
Aegon UK admits it has no idea which of its clients hold US citizenship and says it has no plans to drop US clients.
An Aegon spokesman says: “The measures seem disproportionate. We have no immediate plans to drop US clients, as we would not be able to tell from our records if someone was a US citizen. All we require to know for someone purchasing a pension policy is that they have pensionable earnings.”