The UK press and expat papers in Spain have all carried articles warning that thousands of Brits living in the EU will have their UK bank accounts closed by the end of the year.
In the UK the The Daily Mail, The Guardian, The Times and The Daily Telegraph to name a few, have all detailed how banks including Lloyds, Barclays and even the Queen’s bankers Coutts, will be closing expat accounts and withdrawing services. The reason for this is the UK’s failure to agree a post-Brexit trade deal to allow cross border Financial Services to continue.
Banks are having to make decisions as to which EU countries to pull out of and which to continue operating in.
The bank, which is Britain’s biggest banking group, started writing to its customers living in these countries since August, telling them that their UK bank accounts would be shut on December 31.
Barclays also confirmed that its banking and credit-card customers living in the EU had started receiving letters.
Why Are UK Banks Closing Accounts & Withdrawing Services for Brits Living in the EU?
Until now the UK banks and other financial service providers have been able to use the EU ‘passporting’ system to provide services to customers living in other EU countries. In the absence of a Brexit trade deal, the UK will no longer be able to use the passporting system, This means when the transition period ends, it will become illegal for UK banks and other financial service providers to offer their services to British customers living in EU countries unless they have a licence in each country to do so.
Given the relatively small amount of customers that UK banks have that live in the EU, for most UK banks and other financial service providers, it is not commercially viable to go through the process of obtaining licences and establishing branches in each EU country where they have British expat customers.
Which UK Banks Are Closing Accounts and What Services Are Being Withdrawn?
All the major UK Banks have either already confirmed that they will be closing expats accounts and withdrawing services, or are in the process of reviewing the services that they offer. Closures will affect current and savings accounts, ISA’s, credit cards and investment accounts.
It is not just bank accounts that are affected. Customers are also having their credit card facilities withdrawn. And its not just banks that will not be able to continue offering services. All financial service providers will lose the ability to serve customers in living in EU countries, unless they have opened up shop in each country where the want to provide their services. This includes insurance providers, investment companies and firms who provide financial advice.
Will Any Banks or Other Financial Service Providers Continue Offering Services?
Most banks have already made the decision not to continue offering services in the EU. The decisions are simply based on the commercials. If it’s not commercially viable for big banks with thousands of customers in the EU, to continue operating, then the same will apply to other financial services providers. Not least financial advisers.
Many Brits who moved to Spain have kept their UK financial advisers. This is understandable given that they will usually have had a relationship with them for many years and can therefore rely on them and trust them. The vast majority of UK financial advisers will will not have the means or justification, to go to the expense of setting themselves up in Spain, to continue servicing a few clients who live there.
The reality is that many thousands of Brits throughout Spain and the EU, stand to be abandoned by their UK banks, financial advisers and other service providers due to Brexit.
Read more about UK Financial Advisers and their EU resident clients post Brexit.
What Do Should I do If My UK Banks or Financial Service Provider is Unable to Provide Services in the EU?
A short term measure could be to use the address of a friend or family member. This could help you keep your account open for the time being giving you some time to plan and sort out new arrangements. If you do this, it’s important that you check the terms of the the accounts that you have. Most accounts that include a credit facility, (overdraft, credit card etc), actually require you to be resident in the UK, not just have a UK address.
It really does depend on your situation, and the reason why you use the account provided by your UK bank. If you need an account denominated in GBP (pounds), to make and receive payments, then online account providers like for example Revolut, may have a solution. They offer accounts in the main currencies including GBP, and support direct debits in both EUR and GBP.
Some Spanish banks also offer GBP accounts, and there are also a few international banks such as Standard Bank, that provide accounts in all the main currencies. With the advent of online banks, it’s also quite easy to open accounts with EU online banks, so there are quite a few options to set up alternative banking arrangements.
One thing to also be aware of is that come 1st January, Spanish banks will be able to charge to receive payments from UK banks, so it’s worthwhile taking the time now to fully review your banking setup.
Of course, whilst there are options, when relationships stretch back many decades and your banking has been a habit of a lifetime, being abandoned is a bitter pill to swallow.
If you are affected by this or think you may be, the first thing you should do is contact your UK bank or financial adviser to find out where you stand. If you then need to set up new banking arrangements, it’s advisable to do so without delay.
If you’re not sure what this means to you, whether you’re affected, or not sure what to do and would like to speak to a professional who can guide and advise you, please feel free to get in touch and ask to speak to one of our Financial Services Advisers.
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