Why may some UK banks close accounts of Britons in France?
Some UK banks are considering closing accounts of Britons in France but others are not - why is there a difference?
It is correct that some British banks are currently considering closing accounts of Britons living in the EU before 2021, in view of new complications expected for the banks next year – but not all of them are.
The problem has arisen because of the failure by the UK and EU to agree on a continuation of the 'financial passporting' between the UK and the EU, a system which allows the UK firms to easily operate across borders while it is in the EU.
This is set to come to an end as the Brexit transition period ends on December 31, 2020.
An agreement on financial services is part of both sides’ proposals for the ongoing ‘future relationship’ talks – featuring in the comprehensive draft treaty the EU has proposed, and in a draft trade deal treaty by the UK (the UK has proposed several separate treaties on other areas such as social security or fisheries). Such an agreement would help maintain a simplified access to the EU market for UK financial firms.
However with a ninth round of talks set to take place next week – the last currently scheduled – and little progress reported, time is now very short. The EU has stated there must be a treaty ready for ratification by the end of October if the ‘new relationship’ is to be in place by the end of the year.
If this does not happen, the UK risks falling out of the EU’s single market rules with nothing in place to replace them, including on financial services.
The first indication of a bank taking action due to this was when, as we reported in September's edition of The Connexion, Coutts, a subsidiary of NatWest Group, wrote to its clients in the EU stating it would be closing their accounts unless a new financial deal was swiftly agreed.
The British Bankers’ Association stated at the time: “[financial] passports are the foundation of the EU single market for financial services. Without an agreement, UK banks will face significant regulatory barriers to providing cross-border banking and investment services to EU-based clients.”
Coutts, believed to be bankers to the Queen, is an exclusive private bank offering personalised services to its wealthy clients. At the time there was no indication of services and accounts stopping for customers of retail high street banks.
Recently, however Barclaycard – the credit card subsidiary of Barclays Group, wrote to customers in France warning that, linked to the UK leaving the EU, their accounts would be closed by November 16 if they do not have their residential address in the UK.
Since then certain banks are now known to be considering closing non-resident Britons’ UK accounts by the end of the year, if a financial deal is not agreed before then. We will cover this in more detail in October’s edition of The Connexion, out next week.
British financial sector body UK Finance told The Connexion that the sector has been working hard to prepare for changes caused by Brexit and to minimise disruption for both personal banking and business customers.
“Where possible, firms want to keep providing banking services to customers living in the EEA after the transition period," UK Finance said.
“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 of 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.”
Banks and other British financial services providers are known to have been discussing such difficulties with regulators in countries across the EU and in the UK for some time, but there is no one easy solution once the simple, unified single market rules end.
The new complex picture will mean that the feasibility of banks offering financial services in the EU will vary bank by bank, service by service, and country by country. In some cases services will end in some or all EU countries where a bank considers it is no longer practical.
There is, however, not expected to be a threat to certain services, such as using a British credit card in France (though French businesses might increase the charges for using them) and it will still be possible to make SEPA transfers under the same terms from a UK bank account to one in France.
The British Embassy in Paris has also offered advice on the situation for Britons in France, in a Facebook post.