Banks should give Britons living in the EU “sufficient warning” before closing down their current accounts due to Brexit, MPs on the influential Treasury committee have said.
The committee chair, the Conservative MP Mel Stride, wrote to the Financial Conduct Authority (FCA) on Tuesday, asking the regulator to clarify how much time customers should be granted to transfer their funds, and avoid being left without a bank account at the end of December.
The Guardian reported earlier this month that Lloyds, Barclays and Coutts had told thousands of retail and business bank customers that their accounts would be closed by the time the Brexit transition period ends on 31 December 2020. More banks are expected to follow suit.
Commenting on the letter, Stride said: “Many British expats in the EU are being told that their UK bank accounts will be terminated at the end of the year. It’s vital that they’re given sufficient warning so that they have time to make alternative arrangements.
“I’ve asked the FCA what length of notice period it considers sufficient, and how they make sure that firms adhere to it,” he said.
Banks and other financial firms based in the UK are currently allowed to trade across the European Economic Area (EEA) because member countries follow the same regulatory framework.
However, that arrangement, known as “passporting”, expires at the end of the year. While the UK has passed laws allowing EU banks to continue offering services for customers in Britain, the EU has not reciprocated.
Unless the UK and EU strike a comprehensive trade deal covering financial services, banks will have to secure licences to operate in each individual country and follow separate rules in each jurisdiction.
Customers who bank with firms that own an EU-based subsidiary will see their accounts retained and transferred to that EU entity. For example, HSBC – which already operates in countries including France and Germany – has said it will continue serving UK customers in the EU regardless of the transition period deadline.
Some banks have too few customers across the EU to justify the cost of setting up an EU entity, leaving expats at risk of having their banks accounts closed this year.
Stride said customers should be granted enough time to set up alternative bank accounts: “The greater the notice period, the more likely it is that customers can make alternative arrangements and avoid having their only source of banking removed from them.”
A spokesman for the FCA said the regulator had received the Treasury committee’s letter and would respond shortly.