Brexit has created a headache for banks serving EU nationals who live in the UK, and for some UK citizens living on the continent. A number of accounts have been closed, prompting complaints from some quarters about a lack of sufficient warning.
A number of EU citizens living in the UK have had their bank accounts closed in recent weeks as lenders have geared up for life after Brexit, prompting some concerns that firms aren’t clearly advising people that they might be in the firing line.
The UK’s financial relationship with the European Union has yet to be ironed out. Trading relations between financial services in Britain and the continent is an area not yet fully tackled under the recent trade deal between London and Brussels.
In September last year media reports said that thousands of Britons living in the EU were slated to have their UK bank accounts shut by the end of 2020. Lloyds, Barclays and Coutts told retail and business customers that they would lose their accounts before the end of the Brexit transition period (Guardian, 21 September).
Sources have told this news service that there is also problem that works in the other direction, in the case of UK-based people, who come from from EU states, having their bank accounts cut off without much explanation.
One law firm told this news service that “banks don't appear to be giving clear messages about why they're doing it, which makes recourse harder.” Lawyers are advising EU citizens living in the UK for the long term to register under Britain’s EU settlement scheme in order to curb risks of being cut off from banking services.
The disruption to bank arrangements carries echoes of when the Obama administration in the US enacted the Foreign Account Taxation Compliance Act in 2010, leading to a number of non-US financial institutions ceasing to serve expat Americans because of the perceived compliance costs. The loss to cross-border banking access shows that the globalisation of financial services has, to some extent, gone into reverse.
This news service asked a number of banks about the matter, and received responses from [Barclays">Barclays HSBC and Lloyds Banking Group. Coutts hadn’t replied at the time of this news service going to press; it may update in due course.
A spokesperson for Barclays said: “As a ring-fenced bank, our Barclays UK products are designed for customers within the UK. We continue to review the services we offer to retail customers within the European Economic Area. Where we make the decision to no longer offer products and services, we are contacting impacted customers to give them advance notice of this decision and outline the next steps they need to take.”
“We are well-positioned to support individuals and businesses in the UK and the rest of Europe through the transition and in the post-Brexit environment. We will continue to serve our retail banking and wealth management customers who reside in the EU in accordance with local laws and regulations, and they will continue to have access to the products and services that we currently provide to them,” a spokesperson for HSBC said. The bank did not explicitly comment about account closures for EU nationals in the UK.
Lloyds did not comment on the situation of EU nationals living in the UK whose bank access might be affected, but it did say that it has contacted 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.”
Last August, Lloyds told some retail customers who live in the Netherlands and Slovakia, and a small number of business banking customers in the Netherlands, Germany, Ireland, Italy and Portugal (about 13,000 customers in total across those countries) about the forthcoming changes. Most of these customers hold Halifax, Lloyds Bank or Bank of Scotland current accounts and savings accounts with the group and a small number hold credit cards.
It is understood that a mix of national and European laws and regulations prevent UK banks from continuing to serve such clients.
(Editor’s note: There may well be steps that European nationals living in the UK can take to ensure that they can open and run bank accounts in the UK. London’s status as a great financial hub will be assisted if banks, as well as regulators, don’t make this unduly difficult.)