Thousands of UK expats living in Europe face having to revamp their finances in the aftermath of Brexit as British banks close their current accounts and European ones hike the cost of sending money overseas.
Customers of some of Britain’s biggest banks including Barclays, Lloyds and Nationwide Building Society living in Belgium, Italy, the Netherlands and Portugal have either already had their bank accounts closed or will see them shuttered in the next few weeks.
Meanwhile This is Money understands that European banks appear to be flying in the face of EU payment rules designed to limit the cost of sending money overseas, despite them still applying to the UK.
Around 60,000 expats living in Italy (pictured) are among the worst-affected. Barclays, Lloyds and Nationwide Building Society are all closing expats’ bank accounts
Banks part of the Single European Payments Area, which the UK remains a member of after Brexit, are not supposed to charge more for cross-border payments than domestic ones, whether they are made in euros or not.
The scheme, coupled with EU regulations which came into effect in December 2019, saw British banks like Metro Bank and NatWest cut the cost of sending money to European bank accounts.
NatWest told customers two years ago it was removing any fees for international transfers made digitally, while Metro Bank cut the fee for euro payments from £10 to 20p.
However some European banks now appear to be raising the cost of payments to and from the UK after Brexit, despite the UK remaining a member of SEPA.
One British expat living in Spain posted in a Facebook group that his Spanish bank, Sabadell, said after Brexit the ‘UK does not belong to the EU so the fee to transfer any money outside the EU will be 0.75 per cent of any transaction’, while it would charge him €18 to receive money from the UK into his Spanish account.
This is Money understands payment regulations introduced in 2019 which stopped European banks charging more for international non-euro payments than domestic ones have no longer applied to certain payments in the UK since 31 December, which is why banks are taking the opportunity to charge more.
However, some overseas payments experts said they felt the charges were unjustified. Robin Haynes, the founder of overseas payment service Currency Index, said he felt these charges ‘should not be applied’.
‘However’, he added, ‘it has become apparent that some EU banks have decided to introduce additional charges for payments made to and from the UK. These range from flat fees of around €12 – €18 for receiving a payment, to percentage charges of between 0.3 – 0.5 per cent for sending or receiving larger amounts.
How to beat unfair international payment charges
Robin Haynes recommends those sending smaller payments between the UK and the EU should change to doing so quarterly or twice a year, to reduce the number of transfers being made.
He said those who felt the charges were unfair should complain to their bank first, followed by local regulators and then the European Payments Council, which oversees the SEPA scheme the UK remains a member of.
‘The charges vary per bank, and even per customer, so are very hard to predict. Some Spanish banks have been particularly quick to apply charges, but there have been similar reports in other EU countries too.
‘It is our understanding that these charges should not be applied.
‘However, local regulators and the European Payments Council, who run the SEPA scheme, may not be motivated to argue the case for UK financial institutions and their customers over EU banks, now that the UK is no longer an EU member.’
This is Money contacted the European Payments Council for clarification.
It told us that while the UK was still a member of SEPA, there was ‘no indication’ that EU rules limiting the cost of cross-border payments applied after Brexit.
It referred us to a July 2020 statement from the European Commission which stated that: ‘After the end of the transition period, the EU rules in the field of banking and payment services… will no longer apply to the United Kingdom’, including ones governing cross-border payments.
It added complaints should be made to banking regulators in individual member states.
The news is an additional headache for hundreds of thousands of expats already grappling with the impact of Brexit on their personal finances. Many keep UK bank accounts open for the purpose of receiving money in sterling to then send overseas, often using low cost cross-border transfer services like Transferwise.
But as well as being hit with new transfer fees by European banks, many have had to try and sort out new banking arrangements as British ones close their accounts.
Britons abroad face bank account closures after Brexit
Some current account providers, including Lloyds, have been alerting expat customers since last August that their accounts would be closed as they faced losing European-wide ‘passporting’ permissions which allowed them to operate across the continent.
The loss of passporting, cemented by the post-Brexit deal announced on Christmas Eve, means banks have to comply with the rules in each country and are pulling out of offering certain services in individual EEA countries – the 27 countries in the EU plus Iceland, Norway and Liechtenstein – as a result.
The banking trade body UK Finance said ‘a small number’ of the 1.3million UK citizens living in the EU would see accounts closed, but thousands are still caught up in the closures, with the roughly 150,000 who live in Italy and the Netherlands particularly affected.
|Barclays||Current and savings accounts closed in Belgium, Croatia, Estonia, Hungary, Italy, the Netherlands, Poland, Slovakia and Sweden. Barclaycard accounts closed Europe-wide if customers cannot provide a UK address|
|HSBC||No plans to close any accounts|
|Lloyds/Halifax/Bank of Scotland||Current accounts closed in the Netherlands and Slovakia, business current accounts closed in Germany, Italy, Ireland, the Netherlands and Portugal|
|Nationwide Building Society||Current and savings accounts and credit cards closed in Italy and the Netherlands|
|NatWest/Royal Bank of Scotland||No plans to close any accounts as of December|
While banks are supposed to give customers two months’ notice ahead of any closure, the full picture has only recently become clear and is giving expats a headache.
Derek Humphries, who lives in the Netherlands, wrote on Facebook that three of his UK bank accounts had been closed but ‘trying to set up new bank accounts in the Netherlands seems impossible when you live here but have a UK mobile number.’
Another Netherlands-based expat, Jann Evans, wrote in a Facebook group aimed at UK citizens living in Amsterdam: ‘It took me three months and many, many phone calls in 2020 to open a Barclays account for overseas residents and now it’s going be closed. I receive rent from my house in UK and live here.
‘Any tips on what I should do would be extremely welcome. Opening a foreign currency bank account here for sterling has very high charges.’
Is your account being closed?
This is Money previously put together a guide to some of the options available to UK expats whose bank accounts are being or have been closed.
You can read that here.
Rob Hallums, founder of the financial website Experts for Expats, said ‘the key is not to panic.
‘There are options available and you should not make snap decisions without doing the necessary research first, so be sure to do your own research into the best options available.’
Nikhil Rathi, the new chief executive of the Financial Conduct Authority, warned last year that not all banks were telling customers their accounts would be closed.
Barclays is closing current and savings accounts held by those in Belgium, Croatia, Estonia, Hungary, Italy, Lithuania, the Netherlands, Poland, Slovakia and Sweden if they can’t provide a UK address, while it is cancelling credit cards across the continent if holders cannot provide an address.
Customers were told that if they lived elsewhere in the EEA their accounts would remain open, but they could not open any new ones after Brexit, according to one expat Facebook group.
One man who lives an hour outside Valencia in Spain told This is Money he had ‘previously been on tenterhooks waiting to hear from Barclays’ about his bank account, ever since his Barclaycard account was closed ahead of Brexit on 16 November.
The man, who has lived in Spain for 20 years, said he wanted to keep his account open to receive his private pension, as well as for the convenience of withdrawing cash when he made trips back to England.
Lloyds, and its stablemates Bank of Scotland and Halifax, has closed current accounts in the Netherlands and Slovakia and business accounts in Germany, Italy, Ireland, the Netherlands and Portugal.
Meanwhile Britain’s biggest building society Nationwide is closing current and savings accounts and credit cards for customers in Italy on 26 January, while it did the same for those in the Netherlands at the end of November.
It means the 60,000 British expats who live in Italy are among the most heavily affected by the UK’s departure from the EU and its exit from the single market.
HSBC told This is Money they had no plans to close any accounts after Brexit.
We did not receive a response from NatWest, which also runs Royal Bank of Scotland, but it previously said it was not planning on closing any accounts.
A spokesperson for UK Finance said the decision was a matter for individual banks, but said in a statement: ‘Now that the Brexit transition period has come to an end, a small number of customers living in the EEA may no longer be able to access banking services from their UK based provider due to the rules that govern how customers can access bank accounts and services in different EEA countries.
‘The industry has been working with authorities across the EEA to minimise the impact on customers.
‘However, where changes to services need to be made banks and other providers have been contacting impacted customers and informing them of any actions they need to take.
‘There are a number of alternatives available for customers who are impacted, including switching to a different UK-based bank, a digital account provider or a bank in the country you are resident in.
‘The best option will vary depending on a customer’s individual circumstances and how they use their account, including whether they need to make and receive regular payments in pound sterling.
‘We would therefore advise customers to carefully consider their options and choose an account that works best for them.’