Thousands of Britons who live in the EU will have their UK bank accounts closed at the end of the year owing to United Kingdom’s failure to agree a post-Brexit trade deal.
Lloyds, Barclays and Coutts have told retail and business customers that stand the chance of losing their accounts before or when the period of Brexit transition ends on December 31 and a lot of banks are expected to follow suit.
Lloyds Banking Group, which includes Halifax and Bank of Scotland, has got in touch with its 13,000 customers in the Netherlands, Portugal, Slovakia, Ireland and Germany and warned them that they must make alternative arrangements due to the fact that the bank is no longer permitted to provide banking services.
A spokesperson of the Banking Group said: “We have written to a small number of customers living in affected EU countries to let them know that due to the UK’s exit from the EU, regrettably we will no longer be able to provide them with some UK-based banking services.
“We want to keep customers informed and offer advice on next steps.”
At present, financial services in the United Kingdom can trade across the European Economic Area (EEA) because the same regulatory framework bound the member countries.
The arrangement which is known as “passporting” will end at the end of the year and though the UK has legislated so that EU banks can carry on with provision of services for customers in Britain, the EU has not followed suit.
Except a trade deal is sorted out with the EU, UK financial institutions will have to follow the guidelines which vary from country one to another and depend on the kind of service being offered by each bank.
The Dutch National Bank recently confirmed that UK banks and no longer offer current or savings accounts to retail customers in the Netherlands.
Customers who bank with organizations that own EU-based subsidiaries will have their accounts transferred. Meanwhile, banks that do not have an EU branch would have to request for a licence to trade in every EEA country. Some banks have a very small customer base in the EU to justify the cost.
Someone who banks with Lloyds has expressed her fear over being cut off from her UK pension payments after she was informed by the bank that she would not be able to operate her current and savings accounts after November 2, as such, her balance will be returned to her as a cheque and every payments made into her account after that date will be returned to sender.
She said: “I don’t know what will happen about tax rebates from HMRC or council tax and bills on the property we own in the UK
‘“I don’t know if it’s possible to arrange direct debits and standing orders to UK institutions from a Dutch bank and there will be a lot of expense incurred if payments that skip through the net are returned to sender or if I have to convert euros to sterling whenever we are in the UK.”
Barclays has also notified customers across the EEA that their accounts will be closed.
According to information gathered, a Llyods customer that is based in Germany said she was told she would no longer be able to transact with her Barclaycard which she has been using for all her transactions within the UK.
The customer pleaded anonymity and said: “I’ve had the card for 40 years and pay it off each month from my pensions, which are paid into my UK account, so I’m not sure I’d qualify for a German credit card.”
She said she possessed a property in the UK and remit taxes in the country but she wanted “to maintain my financial arrangements there in case I ever need to live there again”.
While talling about the development, a Barclays spokesperson said: “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 EEA, and any impacted customers will be contacted directly.”
Other banks have not decided on future arrangements. NatWest and Santander said they were reviewing the situation and currently had no plans to deactivate retail or corporate accounts.
HSBC, which has a very large customer base in France, Germany and Switzerland said that as a global bank, it could keep serving UK customers across the EU, but would keep them abreast of any changes that might affect services.
UK financial services are controlled by the Financial Conduct Authority which disclosed it expected banks to liaise with national regulators to gauge the impact of local laws on customers and inform customers of any changes on time.
According to the financial trade body, UK Finance, banks need to unpick the legislation of 30 different countries to work out the modalities of serving customers.
A spokesperson of the body said: “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.”