Brexit negotiations have exposed British expats to a world of uncertainty, not least where their banking and investment portfolios are concerned.
As the risk of the UK crashing out of the EU without a deal rises, the uncertainty is only getting worse. This is a real concern for the 1.3 million Britons living in the EU, as well as UK residents with bank accounts and investments in Europe.
You have no doubt read all of those dire warnings about what could happen if Britain crashes out of the EU with no transition deal at midnight on 29 March 2019. Grounded flights, disrupted food supplies, plunging house prices, a currency run and huge job losses are just the start. Expats may also find their pensions and investments could get caught up in the chaos.
The good news is there are ways to avoid the turmoil, by using an international broker with full bank status that will continue to provide investing and financial services to global citizens, even during the most disorderly Brexit.
Access denied
Currently, British banks, insurers and fund managers enjoy unfettered access to the EU via its “passporting” regime, which creates a single market for financial services and allows firms authorised in any EU or European Economic Authority (EEA) state to trade freely with minimal additional authorisation.
After Brexit the UK will become a "third country” and its financial services companies risk being barred from serving clients in the EU and even sending payments to them, unless some kind of deal is struck or they establish operations in the EU.
A recent British government White Paper stressed that it would be impossible to remain in the EU’s passporting regime post-Brexit as this requires membership of the European single market. It also said that any future arrangement “cannot replicate the EU’s passporting regime”.
There is a danger that British expats working or retiring in Europe could suddenly find they can no longer use their UK bank accounts for deposits and borrowing, or insurance contracts such as pension annuities.
The Association of British Insurers recently warned MPs that without a deal, its members could be barred from paying private pensions and annuities to expat Britons living in the EU, unless alternative arrangements are made.
The estimated three million EU citizens living in the UK who have bank accounts and investments in their home country face similar uncertainty.
British regulator the Financial Conduct Authority (FCA) is working on a "temporary permissions regime” which will allow EU-based companies to continue to access the UK market until the end of the 21-month transition period in December 2020. However, the EU has still not said whether it will reciprocate for Brits.