Home » Brexit » UK bank accounts for expats – will they exist after Brexit?

Some British banks have been informing account holders who now live abroad that their accounts are being closed due to new Brexit rules. For many expatriates, as well as those planning a move to an EU country, the move is a surprise and a worry. So what does it mean for overseas residents and what can they do?

After the referendum in 2016 and ongoing negotiations between the UK and the European Union, the Brexit transition period comes to a close at the end of 2020. For the City of London, international banking and those living abroad, this will bring a few long-term changes. 

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Some UK banks have already begun introducing changes that will affect the accounts of British expats.

Many British citizens with residency in European Union nations still have close financial ties to the UK and have chosen to maintain a UK bank account. They may use it to receive funds such as investment or pension income, or rent money from a property in the UK. Some use a UK bank account to distribute funds to family members who still live in the UK. 

It came as a shock to many, therefore, to receive notification from the UK bank they may have been using for decades, that their account is being closed, often within weeks. 

If you’re affected, currently living overseas or planning to move soon, it’s vital that you prepare.

How is Brexit impacting financial services?

From 1st January 2021 UK banks will lose their right to trade under EU rules. These are the so-called ‘passporting’ arrangements which enable UK banks to provide services to customers in other states in the European Economic Area.

As part of Brexit, a new set of rules will have to be negotiated for financial activity in the EU.

British banks will need authorisation from each country they want to operate in. Some banks have established this already, but some haven’t yet or have chosen not to. As a result, some British nationals who are officially resident within European Union countries have been told by their banks that their accounts and credit cards will be closed before the end of the year. 

Will my UK bank account be affected by Brexit?

Whether this affects you will depend on both the country you are living in and the bank you are with. If you haven’t been notified of any changes yet, it may be worth checking with your bank directly.

Some banks, such as HSBC and Santander, will continue offering their banking and financial services to UK citizens living overseas. Others say that they are still monitoring the situation. A few have announced that they will close credit card accounts but, as a replacement, have offered basic accounts for expats.

Before taking any action or making any changes, it’s worth double checking the options available with your bank.

How much notice will I get if my bank account closes?

The Financial Conduct Authority (FCA) have said that banks must give at least two months’ notice before closing an account in credit. They have also been urged to consider whether closing accounts would bring financial hardship to certain customers and ensure that other products are available to these clients.

If I can keep my UK bank account, will I still be able to use my bank card in the EU?

Yes. Despite the changes, you should still be able to use your UK bank card overseas after the transition period ends on 31st December 2020. Alternatively, if you have a card with an EU bank, you should still be able to use this in the UK.

Should I open a local bank account?

If your UK bank account closes you will of course need to find another option, although do appeal against the closure if you like. If not, you could potentially switch to another UK-based bank or financial institution that is not closing expat accounts, or open a basic account. 

A simpler option might be to open an account in the country where you now reside. If you are a legal resident in the EU country you are entitled to open a local bank account. 

Normally, your passport and a residence certificate will be sufficient to open the account. New arrivals after the transition period may well require a visa or work permit in order to become a resident.  

Your next steps – are you ready for Brexit?

For your state pension, the UK government will pay it into your overseas account at a reasonable exchange rate. 

For private pensions and other income, if it is paid into an overseas bank you may face heavy charges and a poor exchange rate. 

An alternative is to set up an account with Smart Currency Exchange. Have your sterling paid to Smart and we will convert it to euro and send it on. 

Smart will help you make both one-off, large financial transfers between currencies and smaller regular payments into overseas bank accounts. We work with our clients to help them put a strategy in place for all their transfers, to ensure that their money is protected from the risks of currency fluctuations. This approach can save you a significant amount of money and will help you plan your payments in advance.

You can set up a Regular Payment Plan with us, which allows you to automate the transfer process, scheduling payments either at the exchange rate on the day or at an exchange rate you have locked in for a period of time.

 

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