Brexit: information for the banking and payment sectors in the UK

This page provides information on servicing your EEA customers after the end of the transition period.

Servicing your EEA customers after the transition period

If you have customers in the EEA, you need to decide on your approach to servicing your existing contracts with them. You should take the steps available to you to ensure you act in accordance with local law and national regulators’ expectations.

We are clear that firms’ decisions need to be guided by what is the right outcome for their customers and provide timely communications to enable them to make appropriate decisions and take necessary steps. In many cases, it would be a poor outcome for the consumer for you to suddenly stop servicing them.

If you decide not to continue business for any of your customers in the EEA once the transition period ends, you should communicate this clearly to your customers in good time and ensure any customer funds are returned.

We expect your actions to be consistent with the customer’s contractual rights and to treat all of your customers fairly, keeping in mind that different categories of customer might be affected in different ways. This includes identifying whether closing accounts would cause any particular customers or classes of customer undue financial hardship. You should consider this when deciding how much notice and how much support you should give to customers to ensure they can smoothly transition to new arrangements.

Nikhil Rathi, Chief Executive of the FCA, wrote to Rt Hon. Mel Stride MP, Chair of the Treasury Committee, about the closure of bank accounts of customers living in the EU. Read the letter to the Treasury Select Committee.

If you have customers in the Netherlands

The Dutch National Bank (DNB) has published a statement (updated on 1 December 2020 to reflect new rules for Professional Market Participants) confirming that UK credit institutions cannot provide current or savings accounts to retail customers in the Netherlands following the end of the transition period.

There are specific issues that you might need to consider when deciding how to implement the DNB’s overall approach set out in its statement, including in relation to:

  • the exact timing of bank account closures
  • junior ISAs and child trust funds
  • current accounts linked to mortgages

Firms wanting to agree an approach on all or any of the above issues should contact the DNB directly before 31 December.

The statement by the DNB does not relate to consumer credit products and mortgages. The Dutch Authority for the Financial Markets (AFM) has indicated that UK firms are able to continue servicing customers with existing credit products in the Netherlands in most circumstances, as long as they act in the best interests of their customers. Firms may wish to contact the AFM directly if they have any questions.

Cross-border payments

After the end of the transition period, banks and payment service providers will have to provide the name of the payer and payee, and address of the payer, when making payments between the UK and the EEA. These requirements are set out in the Fund Transfer Regulation (FTR).

The FTR is a subset of European legislation that supports efforts to combat money laundering and terrorist financing. The requirements have been ‘onshored’ (and amended) in UK legislation in preparation for the end of the Brexit transition period. It means that banks and payment service providers must include name and address information where one party is outside of the UK or Gibraltar.  

Processing payments with missing information

After the end of the transition period, and until March 2022, UK PSPs will be able to rely on our use of the temporary transitional power (TTP). This will allow firms to continue to comply with the existing requirements of the FTR and process payments initiated by EU PSPs, even if the EU PSP hasn't provided the full name and address details. The TTP is intended to minimise disruption for firms, consumers and other regulated entities, as UK firms phase in regulatory changes as a result of ‘onshored’ EU legislation.

In addition, and in line with Article 8 of the FTR, we expect UK PSPs to have effective risk based procedures that apply where the transfer of payments lacks the information needed on the payer or the payee.

After the end of the TTP period, UK firms acting as recipient PSPs can credit a payment with missing information or make the funds available to the payee, on a risk-sensitive basis. 

If your firm uses the SEPA payment schemes, the European Payments Council published a Brexit reminder on 3 November 2020 with more information about getting ready for the end of the transition period. We're not responsible for compliance with SEPA scheme rules and can't comment on their operation or impact. 

Remember, the UK’s TTP only impacts compliance with UK requirements. It can't assist EU PSPs with their compliance with EU or local requirements. To avoid disruption to customers, when making payments, we expect firms to be ready to provide the name of the payer and payee, and address of the payer, for all transactions initiated after the end of the transition period, including SEPA direct debit transactions.

If any payments are disrupted, we expect firms to communicate promptly with any affected customers, to make them aware of the disruption and give them the opportunity to make the payment in another way.

Safeguarding

As set out in our recent guidance, UK payments and e-money firms should carry out periodic due diligence reviews on their safeguarding banks, including whenever a firm might reasonably conclude that anything affecting the appointment decision has materially changed.

If your firm holds safeguarded funds in an account in the EEA

If your safeguarding institution is in the EEA, your firm should review its due diligence to ensure that safeguarded funds will not be subject to increased risk due to any changes arising from the end of the transition period, and manage the risks accordingly. Your firm should make sure that existing protections for safeguarded funds, especially in the event of insolvency, remain effective from the end of the transition period. Customers must be able to continue to claim and recover their funds in a timely manner, where necessary.

Page updates

02/12/2020: Information changed If you have customers in the Netherlands
22/10/2020: Information added more information on cross border payments and servicing EEA customers
30/09/2020: Information added Section on safeguarding
11/09/2020: Information added Update made on passive servicing