Thousands of UK expats living in the EU have received letters from their UK bank to say their bank accounts and credit cards will be closed as a result of Brexit.
Around 1.3 million people who were born in the UK currently live abroad in EU countries, according to UN data released last year. At least 13,000 Lloyds Banking Group retail and business customers have already received letters to say their bank and credit card accounts will be terminated at the end of the year. Barclays has also contacted some customers, but it wouldn’t confirm how many.
The issue was recently flagged by Conservative MP Mel Stride, who called for banks to give affected customers ‘sufficient warning’ if their accounts were going to be closed; he wrote to the Financial Conduct Authority (FCA) asking the regulator to clarify how much time people should be granted to transfer their funds and find alternative arrangements.
Here, Which? explains why some UK expats are having their accounts closed and explore some alternatives to consider.
Why are some banks closing UK expats’ accounts?
UK banks and other financial firms are currently allowed to trade as part of the European Economic Area (EEA), as all member countries use the same regulatory framework.
This arrangement is known as ‘passporting’, and it’s why Brits who’ve moved abroad have been able to use credit cards and bank accounts from UK-based banks, even though they’re no longer living in the country.
However, once the Brexit transition period ends on 31 December, this passporting arrangement will no longer be in place – that is, unless a specific agreement to carry it on is reached as part of a Brexit deal.
With no such deal confirmed, UK banks are left trying to fulfil and negotiate the stipulations from every EEA country’s regulators. All of them work differently and will be more feasible for some banks than others.
It’s an issue UK Finance has been looking at for some time. A spokesperson told us losing customers is a last resort for banks: ‘Where possible, firms want to keep providing banking services to customers living in the EEA after the transition period.
‘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.’
In short, this means that the situation is different for each financial service offered by each financial provider in each country; for some banks, offering certain products in certain countries simply doesn’t work.
We understand that many banks are still trying to figure out a way of working in different EU countries after the Brexit transition period, while also waiting to see if a deal can be agreed between the UK and the EU – but if no conclusion is reached soon, there won’t be enough time to give customers sufficient notice before 31 December.
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Which banks are affected?
We asked all of the biggest UK banks to share their plans for banking after Brexit.
The two financial institutions that have already told customers in the EU that their accounts will close are Barclays and Lloyds Banking Group, which includes Lloyds Bank, Halifax and Bank of Scotland.
The majority of the banks we spoke to said they had no plans to announce any account closures – but the situation was being ‘monitored’ and could change depending on whether or not a withdrawal deal is reached.
Challenger bank Revolut is one of the few providers not to be affected by the potential loss of passporting. As it has licenced entities in both the UK and the EU, its European entity will still be able to offer its services across the EEA after Brexit takes place.
As for how Brexit will affect existing Revolut customers, a spokesperson told us: ‘Revolut will not be closing accounts as a result of Brexit.
‘Customers living outside the UK will have (or have already had) their account migrated to our European e-money entity so that service can continue smoothly post Brexit.’
Some providers have Brexit-specific information for customers online, so if you’re unsure of whether any accounts or products you hold will be affected after the UK’s withdrawal it’s best to check if there’s already information on the topic – or contact them instead.
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What are expat bank accounts?
A lot of people living outside of the UK still have financial ties to the country. For instance, thousands of Brits choose to move abroad for retirement but need an account for their UK state pension to be paid into.
Many expats also have buy-to-let property they’re letting out in the UK, and it’s often easier to set up payments for things like landlord insurance and other associated bills from a UK-based bank account that’s specifically for expats.
Additionally, many expat accounts allow you to pay for goods in different currencies, and there’s support on offer if things go wrong – such as getting replacement cards sent abroad if you lose yours.
What are the alternatives?
Unfortunately, there are few straightforward alternatives to having an expat bank account.
As a starting point, you could see if your provider can offer you any kind of alternative to the account they are closing. It’s a long shot, as many will require your main address to be in the UK, but it’s worth checking if you can provide a UK address that meets their requirements.
You could also see if a different UK bank will continue to operate in the country you’re living in. As discussed, each country’s banking regulations affect providers in different ways – so, where one may not be able to serve one country, others may be able to continue to offer banking services.
Alternatively, you can opt to get a bank account from the country you’ve moved to. If you are a legal resident in an EU country you are entitled to open a basic bank account; banks cannot refuse your application. The drawbacks here are possibly needing a visa or work permit to open the account, and if you earn income in the UK it will be tricky to receive it.
Have you been contacted by your bank with news that your accounts will close because of Brexit? Share your story via firstname.lastname@example.org.