British expats living in the European Union could face losing their UK bank accounts before the end of the year, because the government has failed to agree banking rules post-Brexit, according to a report in The Times.
Major banks, including Barclays (BCS) and Lloyds (LLOY.L), have begun sending letters to British account holders in the EU to say they will no longer be able to service them after 31 December, when the Withdrawal Agreement ends, because of the cost and the complexity of EU banking rules.
As part of the EU, UK-based financial businesses could “passport” into Europe, but if there is no new agreement on this before 31 December, then banks would need to apply for new banking licences separately with individual EU countries, which would be time-consuming and may not make financial sense.
Jason Porter, director of specialist expat advisory firm Blevins Franks notes that passporting is currently possible because the UK Financial Conduct Authority is bound by the same rules and standards as other regulators in the EU.
“But once the UK leaves the EU, the regulation of financial activity and consumer protection may not continue to line up on both sides,” Porter said in a note. “As such, unless a mutual deal is agreed on financial services, the EU will not permit ongoing passporting arrangements for UK financial businesses and advisers from 1 January 2021.”
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Lloyds began notifying its EU-based customers in August that their accounts would be shut on December 31. The bank told The Times that this affects 13,000 customers across Holland, Slovakia, Germany, Ireland, Italy, and Portugal.
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” Lloyds told The Times.
Barclays said that it had started sending letters to its banking and Barclaycard credit-card customers had started receiving letters — customers in Spain, France and Belgium confirmed to the newspaper their Barclaycards will be cancelled.
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
Coutts confirmed to The Times that it would no longer serve customers based in the EU if there is no agreement to replace the EEA passporting regime between the UK and EU.