Banks planning to close down accounts of Britons living in the EU because of Brexit must give customers sufficient warning to make other arrangements, an influential group of MPs has said.
Mel Stride of the Treasury Select Committee, which scrutinises HM Treasury, has written to the head of the Financial Conduct Authority, Chris Woolard, asking the regulator to set out how much notice it expects banks to give to customers, if they are planning to terminate services.
It comes after this newspaper broke the story at the beginning of September that Britain’s biggest bank Lloyds, which also owns Halifax and Bank of Scotland, is closing 13,000 expat retail and business accounts in Holland, Ireland, Italy, Portugal, Germany and Slovakia from November.
Other banks are preparing to make similar arrangements, but most have stayed silent on how customers will be affected so far.
Mel Stride said banks had a duty to come clean on any changes as soon as possible and before they stripped expat clients of their “only source of banking”.
“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,” he said.
After Brexit, banks will no longer be able to provide UK banking services to expats resident in EU countries unless they set up a separate legal entity in each region.
This will create additional costs for banks and they are instead cutting services in countries where it no longer makes financial sense to operate.
Customers face a bank account closure lottery as it is impossible to know which bank will be maintaining services and which will not.
HSBC has a large number of customers in France and has already moved some business customers who still use a British bank account to its French arm. It is now considering applying for legal permission to continue to provide UK services in some countries, although is yet to announce any account closures and says retail customers are not affected. Its other large expat customer bases are in Germany and Switzerland.
Barclays is “reviewing the situation” and has said it will write to any affected customers, but is yet to announce closures.
Both Santander and NatWest, which also owns Royal Bank of Scotland, said they were reviewing how Brexit talks were shaping up and currently had no intention to close any of their accounts.
App-based bank Revolut, which is yet to acquire a banking license, said its customers will not be affected as it operates under separate European “e-money” institution rules.