With Brexit set to take full effect in just a week’s time, the UK’s financial regulator is warning customers that the end of the transition could push up the cost of EU bank transfers and ATM withdrawals.
In an announcement overshadowed by confirmation of the UK-EU trade deal just a few hours later on Thursday, the Financial Conduct Authority (FCA) sounded the alarm over looming changes.
Although UK customers will still be able to make payments and cash withdrawals in the European Economic Area (EEA) after 31 December, these “may be more expensive and could take longer,” according to the FCA.
From 1 January 2021, banks and payment services providers will also have to provide additional information when making payments between the UK and the EEA, which includes the name and address of the payer and payee. If this information is not provided, there could be disruption to payments.
Customers with important payments — particularly direct debits — going out of their account to an EEA company should check these are going through as normal from 1 January 2021, the regulator warned.
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There may also be changes impacting travel insurance products that cover travel between the UK and the EEA.
The FCA advised customers who may be impacted to visit its website for information, and check the position with their travel insurance provider in advance.
The FCA said it has “put in place plans” to ensure any possible disruption to UK financial services and for UK customers is minimised at the end of the transition period.
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It did not provide further details about how far its warnings and guidance may be affected by a deal, however, and was not immediately available for comment after the UK-EU agreement was struck.
The FCA is warning firms that regardless of the outcome of negotiations between the UK and EEA regarding a trade deal, they need to be prepared for the end of the transition period.
Once the UK’s terms of access to European markets change, many financial services businesses are likely to have to make changes to their systems and services, it added.
The FCA said it “expects firms to have ensured they have assessed the impact on them and their customers, and have taken action so they are ready for the end of the transition period.”
Customers should also be aware of any changes that may apply to them, it added.
Leading major financial institutions began preparing for Brexit changes years ago. Morgan Stanley said in early December it was planning to move around €100bn (£91bn, $120bn) in assets out of the UK because of Brexit disruption.
UK financial firms will lose so-called “passporting” rights to sell their services freely within other EU member states. Such rights to trade as though they were trading domestically have helped the City of London thrive as a major European hub, and there are widespread fears its status and success is under threat from the significant new obstacles to EU trade.
Many smaller firms are unlikely to have been as able to prepare, and there has been sustained uncertainty over the nature of some of the changes.
Nausicaa Delfas, executive director for international at the FCA said: “With only a week to go, firms should have taken all the necessary steps to prepare for the end of the transition period.
“At the FCA we have been working closely with other agencies in the UK and Europe, as well as with businesses, to ensure customers are protected and markets work well.”
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