Consumer Guide on Retail Banking in the European Union after Brexit

The banking and finance industry has been working hard to prepare for changes caused by the UK's departure from the EU and minimise any disruption to personal and business customers.

Where possible, firms want to keep providing banking services to customers living in the European Economic Area (EEA) after the agreed Brexit transition period.

However, there are a small number of customers living in EEA countries in the European Economic Area (EEA), with UK accounts and services, that may be affected as a result of the UK's exit from the EU.

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.

Impacted customers resident within the EEA should be contacted by their provider to inform them of any changes to the services they receive and any actions they need to take.

This general guidance has been created to give customers an overview of what alternatives may be available, but the best option will vary depending on your individual circumstances. Some banks and providers will also post the latest information on their website.

Background

Based on the current situation, and following government guidance, we expect that the majority of people will see limited or no difference to their banking services as a result of the UK's exit from the EU. Most customers will be able to use and rely on their bank accounts and other services, regardless of whether they are provided by a firm based in the UK, as they do today.

However, there are a small number of customers living in countries in the European Economic Area (EEA) with UK bank accounts and services that may be affected by the UK's exit from the EU. For these customers, their bank or provider may not be able to continue providing some of their accounts and services, or continue to provide them in the same way.

This is a complicated issue and the outcome of whether the bank or provider will continue to offer the product or service to a customer living outside the UK will depend on a range of factors. These include the particular product in question, the individual operating and business model of their bank or provider, the country the customer is resident in, and whether the firm believes it can meet the legal and regulatory approach in that country.

UK banks and other financial services providers have been preparing for the UK's departure from the EU for some time. The industry has been working hard to seek to minimise any potential impact on customers and, where possible, to continue providing UK banking products to existing customers resident in the EEA. However, the legal and regulatory requirements will vary in each country.

Some UK banks and financial services providers will contact customers resident in the EEA with UK banking products who are or will be impacted. Some customers may already have received letters from their bank or provider outlining why they cannot continue to provide a service them and what customers should do next. Customers who do not hear from their providers do not need to contact them or take any action now and can continue to use their existing banking products or services as they currently do.

This general guidance has been created to give customers an overview of what alternatives may be available. The most appropriate option will vary depending on your individual circumstances. Some banks and providers will also post the latest information on their website so you may find it useful to check your provider's website.

This is an evolving situation and the regulatory positions in each EEA country are subject to change. If there is a future change and your existing UK banking products or services are impacted, your provider or bank will write to you and there is no need to contact them in the meantime.   

Frequently asked questions

Why are some UK banks terminating or restricting the UK banking products or services of people who are resident in the EEA?

Where possible, firms want to keep providing banking services to customers living in the European Economic Area (EEA) after the agreed Brexit transition period.

The decision to close or restrict UK banking products and services of customers resident in the EEA will depend on a number of factors such as the operating and business model of the individual bank or provider, the product or service being provided, and the legal and regulatory framework requirements in the country in which the customer lives.

Banks or providers will make a decision based on, among other factors, whether they believe they meet the local legal regulatory requirements in the country where the customer currently lives. This decision will therefore vary depending on what account or service is being offered and what country the customer is resident in.

What should someone do if their UK bank account is closed? What alternatives are available and will they be able to automatically transfer across regular payments like direct debits?

There are a number alternatives for customers living in the EEA whose UK bank account is being closed. The best option will vary depending on your individual circumstances, for example whether you can do what is needed through a euro rather than sterling account, if you only require payment services or you need to receive your pension. We would advise customers to carefully consider their options before choosing a new service. Some providers may charge more for providing an account or for certain payment transactions.

As a customer, the alternatives you can try include:

A different UK bank or provider: There may be other UK-based or international banks that will be able to continue to provide bank accounts in sterling after Brexit. Customers should therefore check what accounts are available from other providers and whether they can still receive and send regular payments with these institutions. You should also check whether they can accept applications from customers with an address abroad and how they will be required to verify you,  for example whether you can do this digitally or whether you may need to attend an appointment at a branch. Each bank or provider will have different processes in place.

Digital providers: In recent years, a number of digital-only providers have been established that can provide either electronic money accounts or digital bank accounts.

  • Digital banks: A number of digital only banks have come to the market in recent years and may be able to offer you a sterling bank account, depending on their ability to offer services in a particular country. Many will offer similar products and services to traditional banks, but not all will allow direct debits in sterling. Some of these providers are part of the UK's Current Account Switch Service (CASS) so will allow regular payments like direct debits to be transferred. Your money will also be protected up to ?100,000 (roughly £85,000) in the same way as high street banks through the deposit guarantee scheme.

  • Electronic money accounts and pre-paid cards: There are a number of digital providers that may be able to offer non-UK residents electronic money accounts. Electronic money account providers can offer services that look and feel very much like a bank account and depending on the provider may be able to offer you a mixture of services in different currencies, including both sterling and euro payment services. More information on electronic money accounts can be found on the Money Advice Service website, here.

Electronic money accounts are not part of the Current Account Switch Service so you would need to set up your own regular payments. Customers should always check what services are provided before opening an account.

Please also be aware your money is protected differently by these types of providers. This is called 'safeguarding? and is in place to protect customer funds in case the provider goes insolvent. This is different to a bank where your money is protected up to ?100,000 (around £85,000) by a deposit guarantee scheme. More information on safeguarding can be found on the FCA website here and on the Money Advice Service website here

A local account: European banks can continue to consider applications from anyone legally resident in an EU country. You may therefore be able to open a regular current account with a local provider, but you should check what types of fees are charged for these accounts. In some countries, some providers may charge monthly for providing the account, or may charge for individual transactions. There may also be eligibility criteria, for example a minimum monthly amount to be paid in or a minimum income level of the holder of the account.

If you are struggling to get a local account but you are legally resident in an EEA country you are entitled to open a "basic payment account", subject to anti-money laundering checks. These accounts usually have most of the features a standard current account offers, but as a local account will be in your local currency. They will cover standard transactions such as making deposits, withdrawing cash, and receiving and carrying out transactions, for example card purchases and direct debits. These accounts should also include a payment card and where available the bank should offer online banking services.

Basic accounts do not always have to include an overdraft or credit facility and in some countries, an annual fee may be charged for keeping the account open. Customers whose bank account is being closed could therefore use one of these basic accounts for daily banking.

It may be possible to transfer regular payments across to these accounts, but it is unlikely these will be able to receive regular payments in sterling. Therefore, in some cases it may not be possible to link these accounts to direct debits originating in the UK. There may also be fees and conversion charges attached to transactions made between a UK account and local account in the EEA.

What happens if someone has funds in their account and doesn't transfer these before the account is closed?

Banks and providers will endeavour to provide sufficient time for customers to transfer funds out of their account. The way this happens will depend on the provider and what works best for the customer, so please contact your bank if you have any queries on this. Banks will be in contact with impacted customers whose accounts will be closed to advise them of next steps, and this will generally include information on how to transfer remaining money into another account. The way this happens will depend on the provider and what works best for the customer, so please contact your bank if you have any queries on this.

What happens if someone has an overdraft on their account and doesn't repay their balance before the account is closed?

Banks or providers will endeavour to provide sufficient time for customers to make the plans necessary to repay their overdraft balance. Banks or providers will be in contact with those customers whose accounts will be terminated to advise them of next steps, and this will generally include information on how to repay their remaining overdraft balances.

Can someone resident in the EEA continue receiving their UK pension into a non-UK bank account if their UK account is closed?

The UK State Pension is paid worldwide and can be paid into a bank in the country you are living in, or a bank or building society in the UK.

You?ll need the international bank account number (IBAN) and bank identification code (BIC) numbers if you have an overseas account.

You?ll be paid in local currency, however the amount you get may change due to exchange rates. More information on claiming your state pension while living abroad can be found on the governments website here.

For customers receiving payments from a UK private pension, they should check with their pension provider what payment options they offer for customers living overseas without a UK bank account. In many cases they will be able to pay your income to an overseas bank of your choice. If that is not possible, they may able to send payment by cheque to your home address in your chosen country of residence.

Alternatively, it may be possible for you to set up and have your income paid into a bank account with a UK financial institution that has the necessary licence to operate in territories across the EU.

If you are still unsure of what the best option for you is, you could seek advice from a financial adviser that specialises in financial advice for UK Nationals living abroad who may be able to help.

What should someone living in the EEA do if they want to open a UK bank account? Do they have to physically go to the UK to do so or can they do it online?

For customers resident in the EEA wishing to open a UK bank account, the availability of accounts and processes will differ depending on which bank they decide to apply for an account with.. Some banks will allow customers to open a bank account online while others will ask customers to open an account at a branch in the UK. This position may change after the end of the transition period, starting 1 January 2021

If an EEA resident wishes to open a digital bank or electronic money account, they will usually be able to do so through an app on their smartphone, or online without needing to visit a physical branch. The account opening procedures will however vary from provider to provider in terms of required documents and identity verification.

Area of expertise:

15.10.20

Guidance