Although Brexit has officially already happened, we are in a one-year transition period where many of the rules in the new post-Brexit environment are still being worked out.
A recent consequence of this is that a number of UK expats living in Europe are being told they have to close their UK bank accounts and cancel their credit cards.
This is causing stress for many people. We have heard from British citizens that are long-term residents in Europe being asked to close accounts they have held for decades.
The banks that are acting now are doing so on the expectation that the British government will not reach an agreement with the EU for banking services. If there is no agreement- the no deal Brexit- some UK banks are saying they may have to withdraw services to EU residents, including British citizens.
It’s not just bank accounts though. This can affect you in several ways:
- Money in the bank in the UK: this is the issue that is receiving most media attention. If you are a resident in Europe with a UK bank account, you may be asked to close that account and transfer your funds elsewhere.
- Credit card from the UK: Some UK banks are telling their EU based clients their UK bank credit cards will be cancelled and they have to pay back in full any accumulated debt. We always recommend that if you use a credit card you pay it back in full at the end of the month to avoid the prohibitive interest rates that are charged on these cards. However, if you have accumulated a debt this can be a source of stress.
- Receiving income into a UK bank account: This one may be more complex. If you are receiving regular income from a pension or even as rental income from an investment property in the UK, you may no longer be able to receive that into your UK bank account. We have some clients being told they will be sent cheques, but, with the exception of France, most European countries have stopped using and accepting cheques several years ago. You will need to find a new account in which to receive this income.
- Investments in the wealth management arm of a UK bank: if you have investments through the wealth management division of your local UK bank you might also have to close that account down, selling the investments or transferring them to another custodial structure. This presents potential market timing risk and the complexity of finding alternatives.
What to do?
1. Get clarification: don’t wait for your bank to contact you. Chase your UK bank now and find out what they are doing, what the exact time frame is and what support or contingencies they may be offering you.
2. Shop around: Not all UK banks have confirmed they are taking this action yet. If your bank is, you may yet be able to find an alternative UK bank that will allow you to keep an account in the UK as an EU resident. This is particularly relevant for those people receiving income into their accounts.
3. Plan EU contingencies: it is a reality that the UK is no longer a member of the EU and for many of your financial and other life aspects you may have to find EU based solutions. Make sure you have appropriate financial structures in place in the EU.
4. Get good advice: Make sure you get good advice. Speak with us if you would like to clarify your position and discuss the options you have specific to your needs and situation. Specifically, in relation to investments in the UK, you may be able to find solutions that allow you to keep those investments there, but make sure you are getting independent advice. Again, speak with us and we can either help you directly or help you to find someone in the UK that can advise your properly on your assets there.
Brexit will likely throw up other challenges for British expats in Europe. This one with bank accounts being closed is important, impactful and urgent because you need to take swift action. Our advice is, be prepared, do your research now, plan your contingency actions and get good advice.