As the end of the Brexit transition period looms, the UK has so far failed to negotiate access to the European passporting scheme for banks. Here's what that means if you are British and live in Italy.
Over the weekend it was reported that, with just three months to go until the Brexit transition period ends, the UK has so far not managed to negotiate a continuation of EU banking rules – known as passporting.
Whil many people living abroad just keep a UK account out of habit, maybe to use as spending money when they come back to visit the UK, for others it could have more serious consequences – for example those using their UK account for regular income – in particular for pensions to be paid into or income from UK rental property.
Here we take a closer look at who may be affected.
Is it all banks?
No, it's important to be clear that there is no blanket closure of accounts for all Brits living abroad, it depends on who you bank with and the type of account you have.
And it's not all account types, either. Again, this depends on the type of account you have, with straightforward current/checking accounts less likely to be closed.
Why is this happening?
.Essentially, applying for new licences will create a lot more admin for banks.
Banks already have to do this for many non-EU countries so clearly it is possible to do. But it seems that some banks are deciding that it's not worth the hassle of doing this for all 27 countries in the EU separately, especially ones where they only have a few customers.
As a country that has a realtively small number of British people living here (estimates vary from 150,000 to 300,000) it's not certain whether banks will decide that it is worth their while to obtain a licence for Italy – as well as other EU countries – after Brexit.
Is it only if I use my Italian address?
Many British people living abroad use a 'care of' address in the UK for their banking, for example the address of a family member who will forward on all correspondence they receive.
At this stage it seems that only people who have officially changed their address to an Italian one are receiving letters from their bank.
Which banks are affected?
The Local has asked all the major names in UK banking what their policy is for customers in Italy, here are the responses we have received so far. We will update this page as soon as we receive more responses.
Santander – the Spanish banking giant said it was keeping the situation under constant review but told The Local: “We have no current plans to close any of our retail [personal banking] or corporate accounts.”
Lloyds – the bank is understood to be closing business accounts – not personal accounts – of customers living in the Netherlands, Germany, Ireland, Italy and Portugal. However the bank said it had no current plans to discontinue any services for customers in Italy.
A spokesman said: “We have written to a small number of customers living in affected EU countries to let them know that due to the UK’s exit from the EU, regrettably we will no longer be able to provide them with some UK-based banking services. We want to keep customers informed and offer advice on next steps.”
Barclaycard – Barclaycard is separate to Barclays bank and it is understood that Barclays current accounts are not affected, although the company has not commented on the record so far.
Nationwide – a spokesman said no decisions had yet been taken on accounts held by UK nationals living in the EU. They told The Local: “We are closely monitoring all developments regarding Brexit and are prepared to deal with any outcome.
“Part of this preparedness includes reviewing the ongoing availability of products and services for those members who are resident in the European Union and the European Economic Area.
“Because the outcome of Brexit is not yet clear and the position continues to evolve, there is currently no certainty as to any actions we will be required to take. Regrettably we cannot provide any further detail on the impact on specific products and transactions at this point. However, we will communicate with members as soon as possible about any necessary changes that impact them.”
How could this affect pensions?
“State pensions can be paid overseas, so you can get your pension paid directly into your European account in euros, but not all private pensions have the capability to do this,” international money management specialist Jason Porter tells The Local.
“It's mainly the smaller pension funds, I'd say 90 percent of private pensions can pay to overseas, but not all can so if you don't have a UK account this could be a problem.”
What about income from rental properties?
Many people living abroad rent out their old home in the UK, and while for some this is an investment, for others it can form the bulk of their income, Porter explains.
“If your rent money cannot be paid into a UK account then you have two options – have the money paid into your European account and pay international transfer costs each month – these are a lot less than they used to be as everything becomes computerised, but would still add up over time. Or you could hire a UK management agent who would collect and transfer the money for you – but they will charge you a fee to do this, often 10 percent or more of your monthly rental income.
What are your options if you're affected?
Most British people living in the EU will already have a bank account in the country where they live. If you do, Porter explains, “you need to transfer all the payments, direct debits etc that you can to this account.”
“It's important to point out that this is happening quickly – account closures are likely to take place in November and some people get just a couple of weeks notice.”
“You need to go back through your bank statements for the last few months and make a note of all payments so you can transfer them to your EU account and avoid missing payments and getting hit with charges when your UK account closes.”
For those who cannot use their European account for everything, there are international accounts and 'expat' accounts, but these often require a minimum deposit level, he says.
“Similarly there are 'international' credit cards to replace something like a Barclaycard, but again these are often limited to high net worth accounts.”
“One option that could be worth exploring is Isle of Man accounts – these are sterling accounts but often operate in Europe so already have the European licences that they need.”