Following Brexit, expats are being stung by unexpected account closures and higher transfer fees for moving their funds to and from the EU. Here’s what can you do to avoid getting lost in this new financial landscape.
Following the UK’s exit from the European Union, there have been warnings for British expats not to get caught out by new bank charges when they send money to the EU. In particular, the warnings have been aimed at expats who face having their UK bank accounts closed down and may be looking to transfer balances and savings to their country of residence.
A number of UK big banks have indicated they will be closing the accounts of expats for whom no UK address can be found. According to Which? Magazine, thousands of expats living in the EU have received letters from their banks informing them their accounts and credit cards will be closed. At present, Barclays and Lloyds Banking group, which includes Halifax, Lloyds Bank and Bank of Scotland have said they will be closing some accounts, but others could follow them.
The concern is that people whose accounts face closure could feel pressured into sending their account balances and savings abroad, thus incurring fees for which the EU price cap no longer applies, leaving them out of pocket.
The reason the accounts are being closed has been put down to the unclear situation of trading arrangements for financial firms now that the Brexit transition period has ended. Prior to 31 December 2020, UK financial services providers could trade under the same European Economic Area regulatory framework, meaning expats could use their home country accounts and cards in the EU in a setup known as ‘passporting’.
However, since the transition period ended it remains unclear how such an arrangement could work, with UK banks and other financial intuition’s being forced to negotiate fresh terms for each financial product with each individual member state. Clearly, for some, it is too much of a headache and they have decided it’s more cost-effective to simply close some expat accounts.
Because EU financial regulatory rules no longer apply to UK banks – as well as EU banks dealing with Sterling transfers – charges for sending or receiving money are no longer capped. This means banks can ramp up the transfer fees for money transfers, and several have already indicated they intend to do so. Italian bank Unicredit and the Spanish banking giant Sabadell have both said they intend to take advantage of the removal of the price cap, and others are sure to follow suit.
Many British-born expats retain accounts in the UK even if the live abroad year-round. Doing so can make it easier to pay in things such as pensions or rent from buy-to-let investments. It’s these types of account that are coming under the scrutiny of UK based banks, potentially making it more difficult for expats to access their funds. Furthermore, the fees also apply when sending money from the EU to the UK, making it more difficult and expensive for expats to send money to friends and family, or to pay for bills or other items.
If you are impacted by these new trading arrangements, a solution to the problem of currency transfers would be to open an account in a bank that’s based in your country of residence outside the UK. In fact, some UK banks have subsidiaries in EU countries, so it’s worth checking if your bank is one of them. If you’ve been granted residency of the EU country you are living in then you should be entitled to open an account there.
At the same time, if your UK account is facing closure, you could seek out an alternative UK bank which has no restrictions on expats holding an account yet living in another country. For the time being this shouldn’t present a problem as some banks have said they have no plans to close expat accounts, although they maintain they will continue to ‘review the services they offer to retail customers’ who live abroad.
Avoiding paying potentially excessive fees to transfer money is a simple process once you have an account with a UK bank that’s continuing to support its EU-based customers, as well as another account at a bank based in your EU country of residence. The most cost-effective way to do so is to use the services of a currency provider, who can easily and effectively make money transfers on your behalf, allowing you to sidestep bank fees.
Established currency providers, such as Currency Solutions, can arrange international currency transactions, effectively allowing you to access your money in a straightforward and cost-effective manner. The key requirement is that you have a bank account in both the issuing country as well as the receiving one, as it isn’t possible to transfer money into an account held by another person. Doing so will mean that you can continue to enjoy hassle-free currency transfers without having to pay excessive bank fees, and often at a better rate of exchange.
If you think you could benefit from this type of service, just give us a call or contact our team at Currency Solutions and we’ll help you get on the right track for cost effective and simple currency transfers. We’ll help you to overcome some of the financial headaches that the new post-Brexit financial landscape has introduced, making sure your currency transfers are as straightforward as you’ve come to expect them to be.
Opening an account with Currency Solutions is completely free and you’ll be able to make currency transfers anytime at our excellent exchange rates.
We appreciate that navigating the currency market can be daunting! So, a dedicated account manager will always be on hand to offer guidance.