Thousands of Britons could see their bank accounts closed in EU countries before the end of the year if a trade deal is not reached between the EU and UK before Britain officially exits the bloc.
Lloyds, Barclays and Coutts are three banks that have so far told customers they stand to lose their accounts if no deal is reached before the end of the transition period.
The Lloyds Bank group contacted 13,000 customers last week in five different European countries, warning them to make other arrangements. A Lloyds spokesperson said, “We want to keep customers informed and offer advice on next steps”.
The UK is currently part of the European Economic Area (EEA), which means financial services can trade seamlessly across member countries, as they follow the same regulatory framework, which is known as “passporting”.
Customers of banks that have EU-based subsidiaries can transfer their accounts. That option does not exist for customers who bank with institutions that do not have an EU arm. The bank would then have to apply for a licence in each country, and the customer base in some circumstances is too small to warrant pursuing that avenue.
The UK has put legislation in place to allow EU banks to provide services in Britain, as passporting will end at the end of the year. The EU has not put anything in place, leaving banks to abide by varying rules across Europe.
One Lloyds customer told the Guardian newspaper she feared she’d be cut off from her UK pension payments after the bank told her of the upcoming plans.
“I don’t know what will happen about tax rebates from HMRC or council tax and bills on the property we own in the UK”, she said.
Barclays has also notified impacted customers of account closures. A spokesperson from the bank told the Guardian:
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the EEA, and any impacted customers will be contacted directly”.