British expats living in the European Union will have their UK bank accounts closed by the end of the year if the UK fails to agree a post-Brexit trade deal with the EU. Lloyds, Barclays and Coutts have informed retail and business customers that they will lose their accounts before or when the Brexit transition period ends on 31 December and more banks are expected to follow suit.
Financial services in the UK can currently trade across the European Economic Area (EEA) because member countries are bound by the same regulatory framework. The arrangement, known as ‘passporting’, expires at the end of the year and, while the UK has legislated so that EU banks can continue to provide services for customers in the UK, the EU has not done the same.
Customers who bank with firms that own EU-based subsidiaries are having their accounts transferred, but banks that do not have an EU arm would have to apply for a licence to trade in each EEA country.
Lloyds Banking Group has contacted its 13,000 customers in the Netherlands, Slovakia, Germany, Ireland and Portugal, warning them they must make alternative arrangements because the bank is no longer permitted to provide them with some UK-based banking services. Barclays has also notified customers across the EEA that their accounts will be closed.
Other banks have yet to decide on future arrangements. Santander and NatWest said they were keeping the situation under review and currently had no plans to withdraw retail or corporate accounts. HSBC, which has a large number of customers in France, Germany and Switzerland, said that as an international bank it could continue to serve UK customers across the EU, but would keep them informed of any changes that might affect services.
UK financial services are regulated by the Financial Conduct Authority which said it expected banks to engage with EU member state national regulators to assess the impact of local laws on customers and to inform customers of any changes in a timely manner. The impact on each customer will vary depending on the operating model of their bank or provider, the product or service being provided, and the legal and regulatory framework in the country in which they are resident.
“Sovereign has longstanding relationships with many banks in the UK and around the world and it is strongly recommended that we assist EU-based clients with bank introductions and the preparation and submission of the necessary documentation,” said David Griffiths, director of Sovereign (UK) Ltd. “Clients are, of course, free to choose their own banks but generally an account can be opened more quickly and on better terms at banks known to, and recommended by, Sovereign.”