Nearly three-fifths (59%) of international financial advisers say their clients are concerned about the Common Reporting Standard (CRS), according to a survey by Old Mutual International (OMI).
A quarter (25%) of respondents said one of the main reasons why clients are worried about the CRS is that they don’t understand it; while 22% said that clients want to simplify the process, with less personal data being shared.
Advisers, themselves, believed they have a strong (19%) or good understanding (47%) of the standard. In contrast, 25% said they have only a slight understanding and 9% admitted they have no understanding at all.
Data breach risks
OMI suggested that the complexities of the financial affairs of high net worth individuals means that they may have assets held in multiple jurisdictions around the world, the details of which may be shared with multiple tax authorities in a manner that may or may not be sufficiently secure, adding that the risks of a data breach rise with each transmission of data.
Jason Pearce, head of technical sales for Hong Kong and north-east Asia at OMI, said: “The Common Reporting Standard is designed to help combat tax evasion and therefore any customer who is not infringing the rules should feel that they have nothing to worry about.
“It is interesting that concern has been raised about potential data breaches. With the CRS there is a lot of data moving around the world, not necessarily in a secure fashion, and this could lead to devastating consequences if people’s records are compromised.
“We know that data is at its most vulnerable when it is being transmitted, so it stands to reason that someone with complex financial affairs will want to find ways to mitigate the risks of their personal data being intercepted.
“High net worth individuals can mitigate these risks by using wealth solutions that help them to simplify their affairs and provide the safety and security of their data.”
OMI conducted the adviser survey in June 2018 with 180 respondents from across the UK, Europe, Middle East and Asia.