UK banks discrimination against expat Britons is now illegal

Published:  2 Oct at 6 PM
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UK expats living overseas will be happy to hear British banks’ discrimination against those wishing to retain or open accounts with high street banks is now against UK law.

Over the past few years, British banks have been operating an almost total ban on non-resident, non-domiciled, UK expats wishing to open bank accounts in their home country. Worse still, the majority of high-street banks have been busily closing existing expat accounts, often with very little notice, thus causing huge problems for British citizens living permanently abroad.

Although no official reason has been given, with banks hiding behind the excuse that they are providing their services solely to residents in the UK, it seems the real reason is that the lack of a UK address is preventing financial companies from checking customers’ credit ratings before underwriting borrowing. Few of the expats who’ve been hit hard by UK banking restrictions will have realised the FCA’s Payment Account Directive was issued as long ago as 2014, and was deliberately ignored by the UK’s high street banks.

The directive was aimed at ensuring banking freedom to all consumers in EU member states, regardless of their nationality, country of residence and status. The directive was finally entered into British law on September 18 and, although it’s not yet clear what effect it will have on expat banking, it will affect a million or more British expatriates in EU member states. The new law will be especially relevant for the hundreds of thousands of Brits in France, Italy and Spain, all of whom will now be able to legally open bank accounts with UK-based banks. Services will include debit cards and online banking services, but no credit will be offered.

Should a UK bank refuse to open an account for a British expat living overseas, the bank must provide a fully detailed reason for the refusal. Grounds include money-laundering and criminal activity, both of which are tricky to prove, are hardly likely to apply to elderly British expats and could prove useful in court if an unsustainable or mistaken allegation is made. The nine major high street banks now forced to comply with the newly introduced legislation are HSBC, Lloyds, Royal Bank of Scotland, Cooperative Bank, Nationwide, the TSB, Clydesdale and Yorkshire, Barclays and Santander.

At least for the moment, there’s no guidance being issued by HMRC on the new law’s effect on expat tax residence. At present, the statutory residence test considers the holding of a UK bank account is a financial tie to Britain.
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