Until recently, expats who chose to settle in warmer climes have been able to continue banking and saving in the UK.
However, choices have narrowed over the last 18 months and there are now no major onshore UK banks or building societies that are willing to take money from British expats, stating in their account terms and conditions that applicants must be UK residents.
Account Closures Looming
In addition to the restrictions on opening new accounts, people who have existing savings or current accounts run the risk of having them closed or having new conditions applied, as has already happened to some Barclays customers.
The changes come in light of recent changes to international banking legislation.
Pensions and Investments Implications
Although UK expats can open new bank accounts in their new domicile, those with UK-paid pensions may face problems with receiving their funds, as many UK pension providers will only pay into a British bank account, potentially leaving pensioners who have moved abroad for a peaceful retirement in the sun with no means of funding it.
The same problem applies to those with savings accounts who wish to switch their investments in search of a better interest rate.
Although existing accounts will remain open for the foreseeable future, investors will not be allowed to move their funds to another UK bank or building society.
Offshore Options for Expats
The obvious solution to the dilemma for investors and retirees who wish to keep their funds with a well-known traditional bank is to move their cash to an offshore bank instead of a land-based one.
Unfortunately, these options are also narrowing thanks to an increase in regulatory fees and many years of poor interest rates, proving to be a turn-off for the parent banks.
In addition, traditional expat financial hubs, such as Guernsey, are becoming stricter.
Account opening criteria are narrowing depending on the country in which the expat resides, and many are also insisting on a minimum deposit or investment amount, usually around £5,000, but can be £25,000.
In many cases, where an account has remained dormant for a certain period of time without being used, the bank will close it, giving two months’ notice.
Complaints to the Competition and Markets Authority
Following a number of complaints regarding the problems faced by British expats with UK banking, a report is currently being compiled by the Competition and Markets Authority.
The CMA intends to look into each complaint to determine whether UK bank customers who have decided to move or retire abroad are getting a poor deal.
However, it is not anticipated that there will be much good news for any customers that are affected.
Indeed, a CMA spokesman stressed that although they had received some correspondence highlighting issues that had been encountered by non-UK residents in opening UK bank or savings accounts, the issue was outside the scope of the CMA’s investigation and the work of the wider organisation.
The whole debacle now leaves those who have chosen to retire or live abroad in search of a better life with multiple issues surrounding their pensions and investments.
And with the outcome of the Brexit talks concerning the rights of foreigners to live abroad still unclear, there will be many expats who are now considering abandoning the sunshine of the Costas for the soggy, more secure climate of Blighty.