21/09/20

UK: Brexit fuels forced account closures for expats.

As published on international-adviser.com, Friday 18 September, 2020.

Some British nationals living in the European Union have started receiving letters from their UK financial institutions stating that their accounts will be closed by the end of 2020, expat advisory firm Blevins Franks has told International Adviser.

This is because financial services providers in the UK may not be able to legally keep serving their expat clients in the EU after 31 December 2020.

The end of this year marks the deadline for the Brexit transition period, which would see any passporting rights disappear for firms based solely in the UK.

Current rules allow businesses to conduct cross-border transactions between EU member states through shared regulation, but once the UK leaves the bloc, such regulations may not continue in their current format, or at all.

The move is reminiscent of the treatment of American expats who have had their accounts shut, or been turned away by foreign financial institutions, due to the reporting requirements set out in the Foreign Account Tax Compliance Act (Fatca).

Jason Porter, director of specialist expat advisory firm Blevins Franks, told IA: “There are also examples of UK investment managers withdrawing their services as advisers of underlying investment portfolios held within pensions schemes and offshore life policies, where the scheme holder or policyholder is a UK national living in the EU.

“In addition, savings and investments held with an EU-based institution from 2021 may no longer accept instructions, such as top-ups, from a UK adviser.

“The financial regulator in France, for example, has already confirmed it will be illegal for French banks and insurance firms to do business with a provider which is not authorised in the country.

“We can expect similar positions to be taken by other EU regulators seeking to protect consumers in their country, so this could limit the planning opportunities for expatriates using UK-based advisers.

“Affected clients and their advisers need to act quickly to make alternative financial arrangements,” he added.