If there is no Brexit agreement to regulate UK financial services firms, Brits abroad will suffer.
Expats are being hit by more banks closing accounts for Brits living in Europe ahead of the end of the Brexit transitional period. UK financial services firms currently operate under European Union (EU) rules that let them ‘passport’ their services across the trading bloc.
But if there is no trade deal or clarity on how banks can operate in the next few months, expats could be left without access to these services. UK banks and wealth managers would be unable to operate in an EU country unless they are regulated in it. Barclays, Lloyds and Coutts have already warned customers that their accounts will be closed. Now Which? is warning that other providers are leaving customers without accounts.
The consumer watchdog said expats have been told by the Co-operative Bank that their accounts will be closed by the end of the year. The letter says: “We’ve recently been advised by the Dutch National Bank that we’ll no longer be permitted to provide cross border deposit accounts for Dutch retail customers from 31 December.
“As our records show that you currently reside in the Netherlands, we’ll no longer be permitted to provide you with current or savings account products or services.”
Without UK-based services, expats will need to open accounts locally, but could also be hit with hefty transfer fees if they need to pay for items back home. For example, the Which? user, Fiona, says she uses her Co-op account to pay for her mum’s groceries in the UK and will instead have to pay a €6 charge each time she pays someone abroad from her Dutch bank account.
It comes amid concerns that retirees moving abroad after the Brexit transitional period will lose rights to state pension increases, similar to how those who retire to commonwealth countries such as Australia are treated.
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Finn Houlihan, managing director at advisers ATC Tax, says:
"Bank account closures will have a significant impact on expats, particularly retired ones, who will be deeply concerned about these developments. “The cost of accessing a state pension will certainly increase if an expat’s UK bank account closes, as the payments will go into a local account as a foreign payment, causing a currency conversion charge, limiting their purchasing power.”
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