Brexit: British expats warned ‘passporting is over’ as accounts are closed and costs rise | Personal Finance | Finance
Brexit will cause British banks to close current accounts for UK expats based around Europe in the coming weeks according to recent reports. On top of this, British expats based abroad may also end up facing limited options, with several European banks appearing to raise the costs of sending money abroad, directly in opposition to EU payment rules.
Last August, several current account providers warned their expat customers their accounts would be closed as European “passporting” permissions became lost or obsolete.
While many remained hopeful a banking passport solution would be found, new comments from French Minister Clement Beaune have poured cold water on prospects.
Passporting allows banks to provide services through the EU with few limitations but this week Clement confirmed passporting would never be offered to nations outside of the trading bloc.
While noting the UK may be granted equivalence, it is far from guaranteed and when asked on any future deals the EU could provide to the UK, Clement had the following response: “No, passporting is over, that is where I mentioned the consequences of Brexit.
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According to analysis from deVere Group, British banks began to write to their customers in late 2020 to warn them of the oncoming changes and Nigel Green, the company’s chief executive and founder, explained why banks have little choice in the matter: “To operate without passporting becomes enormously complex, incredibly time-consuming and very expensive for banks.
“This is the reason why they are ditching many of their customers across Europe – even if they have been with them for decades.
“We only have a matter of weeks until it will become illegal for most UK banks to service many clients in the EU.
“This will cause considerable disruption for many individuals, families, businesses and other organisations, especially where there are larger deposits, standing orders, regular payments and credit facilities to another bank.”
To add additional stress to banking customers’ lives, evidence has reportedly emerged of financial institutions raising their payment costs, in direct breach of European rules.
Banks that are part of the Single European Payments Area, of which the UK remains a member despite Brexit, are not supposed to charge more for cross-border payments than domestic ones, regardless of currency concerns.
New rules introduced in 2019 enforced this, leading to British banks like Metro Bank and Natwest cutting their own costs to ensure compliance.
However, some European banks now appear to be raising their costs on payment transfers to and from the UK, with a Spanish consumer highlighting issues with their transfers on Facebook.
In addressing the concerns, the European Payments Council referred to a statement made in July 2020 from the European Commission which stated: “After the end of the transition period, the EU rules in the field of banking and payment services… will no longer apply to the United Kingdom.”
The council detailed complaints on this problem should be directed to banking regulators in individual member states.
Banking institutions in the UK are regulated by the FCA.
Additionally, they may also be regulated by the Prudential Regulation Authority, who often work in tandem with the FCA.