Thousands of British expats resident in EU countries like France and Spain have had their banks accounts closed. Customers of Barclays Bank living in France are among the latest to receive notification their accounts must be shut down because of red rape linked to Brexit.
Although the UK departure from the EU has not officially been blamed for the banking bombshell, there is no doubt the move has influenced the decision. Financial institutions in the UK previously used the EU’s passporting system to help provide services to expat clients who retained their UK accounts, but this is no longer possible.
‘Passporting’ enables UK banks to provide services to customers in other states in the European Economic Area (EEA) – the European Union plus Iceland, Liechtenstein and Norway – without having to get direct authorisation in those states. However, UK banks now need to have separate authorisation in every EEA country where it operates.
Some banks, including Barclays, Halifax and Lloyds, have decided to simply close customer accounts in countries rather than obtaining approval to continue running expat accounts. Others, like Santander, won’t close existing accounts but refuse to allow new accounts to be started., it has been reported.
Thousands of EU-based accounts have already been closed by the UK banks, with more expats receiving notification they should make alternative arrangements. Around 1.4 million British citizens currently reside in EU nations. Expats usually operate a UK bank account to receive pension payments, salaries and other income sources.
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British expats often choose to keep a UK account open if they receive a pension, salary or other income, such as rental payments for a UK home, in pounds, as many non-UK accounts have fees or poor exchange rates for converting pounds into local currency.
Not all UK banks are closing accounts belong to expats. HSBC, which has branches around the globe, has indicated it will still consider applications from customers who move to a European country. Alternatively, for some customers, if may be preferable to open an account with a local bank if much of their financial transactions are conducted in that nation. Any resident in an EU country is entitled to open at least a basic account without too much trouble.
Banking body UK Finance claimed the majority of people living in the European Economic Area should not be impacted by bank account closures. However, it does state that anyone resident in the EU who has a bank account closed by a UK provider, still has a number of options depending on circumstances and remaining financial links to the UK.
A banking expert in Spain commented: “If you are a legal resident in the EU, you’re entitled to open a basic bank account. However, it’s unlikely these kinds of accounts will be able to deal with regular Sterling transactions, and they may charge fees and conversion charges for transactions made between an account in the UK and another in the EU.”
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