Looking at the options as UK banks may lose ability to offer services in EU after a No Deal Brexit - Gareth Shaw

Q I live in the Netherlands and I’ve held a current account with the same building society for three decades. It has written to me saying that my account is being closed after December 31. It says it is because of Brexit. Is this right? What can I do about it?

Prime Minister Boris Johnson is running out of time to secure a free trade deal with the EU. (Photo by Dan Kitwood/Getty Images)
Prime Minister Boris Johnson is running out of time to secure a free trade deal with the EU. (Photo by Dan Kitwood/Getty Images)

A. There are 1.3 million people born in the United Kingdom who now live in the European Union, according to the United Nations, and December 31 marks the end of the UK’s transition out of the EU. Since January 31 this year, when the UK left the EU, the nature of the future relationship between the two has been under intense negotiation – at the time of writing, they are going down to the wire.

Without a clear view of how the UK and the EU will trade with each other once the transition period ends, there is a huge amount of uncertainty for businesses across all sectors, not least the financial services industry.

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When the UK was part of the EU, UK banks had the ability to offer accounts and services to people in other EU countries, under a system called ‘passporting’. This means that the UK banks have been able to use the same rules and regulations for all countries in the European Economic Area (EEA).

But when the Brexit transition ends, this won’t be possible without it being part of the withdrawal deal that is currently being negotiated. Instead, if banks want to offer accounts in a particular country, they will have to follow each set of rules and regulations in each country. This is complicated to do and expensive for banks to undertake, and may not make sense if they only have a very small number of existing customers residing in a country.

In October, the Dutch National Bank said that UK credit institutions can no longer provide cross-border deposit-taking services to Dutch retail customers after the Brexit transition period. This is why your account is being closed.

At Which? we’ve contacted the major banks and building societies to understand how they are adapting to Brexit, and what that means for customers living abroad. UK Finance, the trade body that represents banks, has said that the majority of people in this situation should be unaffected, but hedged that things could change in the future.

I think it’s important to say that closing accounts for customers is really a last resort for the banks. But without knowing whether they can still operate under the old EU rules, they have had to take difficult decisions.

Barclays for example, is closing accounts for customers in Belgium, Estonia, Italy and Slovakia who don’t have a UK address, while all Danske Bank customers living in the EU will have their accounts closed, apart from those in Norway, Denmark, Sweden and Finland , as well as the Republic of Ireland. Nationwide is closing accounts held by customers in the Netherlands and Italy, while the Co-operative Bank is closing accounts in the Netherlands, too. Customers based in Germany, Italy, the Netherlands, Portugal, Republic of Ireland and Slovenia will see their accounts with Halifax, Lloyds Bank and Bank of Scotland (all part of Lloyds Banking Group) closed.

The only bank that said that it hasn’t closed accounts is Santander, although it told Which? that ‘non-UK residents can no longer open accounts with the bank, and existing customers won’t be granted new requests for new or increased overdraft limits, credit card limits or additional cardholders.’

You will need to find another account. You can open one with a bank that’s still operating in the Netherlands; or open an electronic account or prepaid card, which operate like bank accounts, but aren’t banks and so do not offer the same protections as regulated banks.

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Finally if you’re a legal resident in an EU country, you can open a basic bank account. However, these may not be able to deal with transactions in Sterling or may charge you fees.

Gareth is the Head of Money at which.co.uk

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