UK Nationals in Europe – Is Your Bank Account At Risk?
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On 31st December 2020, the
Transition Period will end, and the UK departure from the EU will come into
force.
While discussions continue
around life past 2020, there remains much uncertainty about what the final
‘divorce agreement’ will look like, and how this will impact British citizens
living in EU member states.
In a recent announcement, some
of the biggest UK banking providers have warned that, without post-Brexit
negotiations being finalised, they may be forced to close bank accounts held by
British nationals living in Europe.
Time is of the essence, and such
negotiations continue to show little sign of progress; so what can expats
do now to prepare for this potential eventuality?
International
Banking and the Brexit Withdrawal Agreement
While the Withdrawal
Agreement,
formalized in January 2020, sets out the terms of the Transition Period, final
terms post-transition are yet to be agreed. The latest update this week was a
meeting of the General Affairs Council, where Ministers discussed conclusions
ahead of the special European Council scheduled for 1st
– 2nd October 2020.
Those ongoing negotiations
center around factors such as:
·
Customs controls between the UK and the EU
·
Controls between Britain and Northern Ireland
·
UK state aid rules for businesses
·
Tariffs and quotas between individual nations
·
Environmental protection policies
With a realistic deadline of
October for any agreements to be ratified in time for the end of the Transition
Period, time is extremely short.
The EU requires two months for
formal ratification processes, and therefore if terms are not agreed by the end
of October at the latest, the UK will depart the EU without a deal.
Why
UK Banking is Affected by Brexit
It might seem odd that UK banks
are warning of potential account closures. However, this all centres around
rules around ’.
This phrase refers to the
practise throughout the EU, whereby banks and financial service providers can
trade freely throughout other EU/EEA authorised states. In essence, the
‘passport’ means that members of the single market enjoy freedoms when it comes
to banking transactions. When the UK leaves the EU, it will no longer be
permitted to apply the EU rulebook to financial services. Non-EU firms must
adhere to strict regulatory barriers to cross-border banking and investment
when dealing with customers and other organisations in EU member states.
After 31st December 2020, the UK
will become a country outside of the EU, and without a deal dictating the terms
under which British banks and finance providers can trade, they will be left in
limbo. They will have to apply the non-EU regulations to their transactions
until terms are negotiated, agreed and ratified. UK
banks will have a choice about abandoning expat accounts
– but will be forced to either apply for new permissions or close accounts
altogether.
It will be illegal for financial
service providers to continue serving British customers in the EU, without
having a license that allows them to do so.
Which
Banks are Closing UK Expat Accounts?
Currently, announcements have
been made from:
·
Lloyds
·
Halifax
·
Bank of Scotland
·
Barclays
·
Coutts & Co
These banks have started
contacting British customers living overseas to advise that their accounts will
be closed on 31st December 2020. Natwest and Santander have advised that – as
yet – they do not plan to close accounts, but are ‘considering their options’.
This may be dependent on an
agreement being made in time for ratification, permitting UK banks to continue
to provide cross-border services to expat nationals living in Europe. However,
the complication for many financial services providers is that, without a
blanket agreement, it will be too costly and complex to apply for individual
licenses for every EU member state.
Each country has its own
specific rules. Therefore, banks would need to try and negotiate the financial
frameworks and banking regulations for each of the 27 member states to apply
for the correct licenses, and adjust their banking practises to comply with all
those local laws. It seems likely that British banks will continue to provide
banking services to expats in some pensions in the uk, where they have
sufficient customers to justify the cost, and where the regulatory demands are
possible to meet.
In European countries with
complex laws, it may be impossible to comply with the licensing regulations, or
the cost of doing so may be prohibitive.
UK banks may:
·
Write to expats giving notice of account closures.
·
Apply for permission to continue operating in some countries.
·
Decide to close accounts in some member states.
For example, the Lloyds Group
(including Halifax and Bank of Scotland) have contacted 13,000 expats living in
Holland, Slovakia, Germany, Ireland, Italy and Portugal. They have not yet
confirmed whether account closure notices will be served on UK expats in other
EU member states.
Preparing
for Brexit for UK Expats
Here at Chase Buchanan, we
support British expats living throughout the EU with financial planning, wealth
management, retirement budgets and investment expertise.
pension
transfer
professional teams recognize the challenges that Brexit presents, and the
concerns this gives to expats who still do not know whether an agreement will
be reached, or whether their accounts and finances will be impacted by the
failure of the UK government to reach an agreement with the EU. Until further announcements
are made, it might feel impossible to make an informed decision. However, we
advise taking action now to avoid having to react fast when the Transition
Period reaches an end.
By reviewing your financial
affairs, identifying ‘at-risk’ accounts, and adopting a future-proof strategy
to protect your assets, you can avoid any of the stress and time-pressures
likely to be experienced by expats who leave their accounts in situ pending
further detail. Whether negotiations reach a successful conclusion is anybody’s
guess. Still, given that only a few weeks remain until the deadline for new
banking guidelines falls due, prudency is key to safeguard your finances.
Options such as transferring uk
pension for expats, revisiting investment strategies and aligning your accounts
with EU institutions may be a lucrative option. This prevents being stuck in
the inevitable backlog of applications once the impact of Brexit hits, and may
be a cost-efficient way of taking advantage of free movement rights in terms of
banking transactions until they expire on 31st December 2020.
With teams in Cyprus, Spain,
Portugal, France and Belgium, as well as in the US, Canada, Isle of Man and our
Administration Centre in the UK, Chase Buchanan is ideally positioned to help
you protect your finances, and be prepared for Brexit well in advance. Get
in touch with our regional offices.
Reference url:-
https://chasebuchanan.com/uk-nationals-bank-account/
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