FCA takes ‘welcome step’ in asking banks to warn customers over account closures

The City regulator has said it is engaging closely with banks about their plans for servicing British expatriates living in European countries after the Brexit transition period.

Concerns were raised in September by the Treasury Committee about reports that customers of UK banks living in the European Union had received letters informing them that their current accounts will be closed once the transition period ends on December 31.

The Financial Conduct Authority (FCA) and the Bank of England have written to CEOs of UK and international banks, saying customers should be treated fairly and given sufficient notice to make alternative arrangements if some services are reduced or ended.

The letter says: “The ability of UK banks to continue providing some services to customers – particularly retail customers – resident in the EU will be determined by national regimes.

“Firms’ decisions should be guided by what is the right outcome for their customers and provide timely communications to enable them to make appropriate decisions and take necessary steps. In many cases, it would be a poor outcome for the customer for you to suddenly stop servicing them.

“If you have identified customers who will be affected by a reduction or cessation in service provision, you should ensure that they are treated fairly and provide them sufficient notice to seek alternative arrangements in an orderly manner.”

In a letter to Mel Stride, chairman of the Treasury Committee, FCA chief executive Nikhil Rathi said: “We are engaging closely with the large banking groups about their plans for servicing EEA (European Economic Area)-based customers after the transition period.

“Not all firms are informing customers their current accounts will be closed. However, where firms do decide to do so, there are contractual provisions between the firm and the customer governing the notice periods they need to give.”

Mr Stride said: “British expats in the EU must be given fair warning by their UK banks if their accounts are to be closed at the end of the transition period.

“The FCA has now told banks that they should provide timely communications with customers, ensuring that they are treated fairly and provided with sufficient notice to seek alternative arrangements.

“This is a welcome step; the committee will continue to monitor this situation closely.”