British expats in Europe no longer have the problem of holding a UK bank account even if they have no roots in the country.
For years, banks have turned away expat customers because they have no address in the UK.
The lack of an address stopped financial firms from checking credit histories and made underwriting borrowing impossible.
Now, a new regulation barring financial firms from discriminating against expats customers has come into force.
The softly-softly introduction of the Payments Accounts Directive was met with a wall of silence from banks.
However, the law was adopted in June 2014 and came into force on September 18, 2016.
Rule change affects 1.2 million Brits
The main change for expats is the legislation ensures any person legally resident in the European Union has access to banking services not only in the country where they live, but in any other member state as well.
This allows hundreds of thousands of expats in the popular expat destinations of Spain, France and Italy to open basic bank accounts in Britain.
These accounts come with a debit card and online banking but often have no credit facilities.
Other clauses of the directive call for lenders to make fees and charges more transparent so customers can compare accounts and to make switching accounts between providers easier.
Banks have 10 working days to open or refuse an account, but must explain why if a customer is rejected.
The grounds for refusal include suspected money-laundering and other criminal activity.
Banks must comply with law
Nine banks have been ordered to comply with the directive:
- Barclays
- Clydesdale and Yorkshire Bank
- Co-operative Bank
- HSBC
- Lloyds Banking Group (including Halifax and Bank of Scotland brands)
- Nationwide
- Royal Bank of Scotland (including NatWest and Ulster Bank brands)
- Santander
- TSB
The lack of a permanent British address has stopped expats from keeping a bank account when they leave the country.
So far, HM Revenue and Customs (HMRC) has not commented on how the directive will affect tax residence.
One of the tests of whether an expat is tax resident in the UK is whether they have a UK bank account, which is counted as a financial tie in the statutory residence test.
