We wrote an article recently detailing that many British nationals living in Spain and other EU countries, have received letters from their UK banks telling them that their accounts will be closed at the end of 2020. This due to no Brexit trade deal having been agreed.
That article explained the impact of no Brexit trade deal on financial services providers in the UK. After 31st December 2020, these service providers will not legally be able to carry on providing services to their expat clients who reside in Spain or other EU countries.
The Brexit transition period ends at the end of the year, and with it the financial services licence EU ‘passporting’ rights which allow UK firms to provide financial services in EU countries.
As a result many providers, including Financial Advisers, are withdrawing their services as advisers where their client is a UK national living in the EU. It is only a small minority of financial service providers that have taken the necessary steps to establish themselves in the EU so they can continue providing their services.
It is therefore quite likely that from 2021, most expats living in Spain or other EU countries will not be able to receive advice or services from their UK Financial Adviser. Clients and advisers alike who are affected by this, should be acting now to make alternative financial arrangements.
UK Financial Advisers and Advice in the EU After the Transition Period
The UK is unlikely to get any special access to the EU over and above any other third country. That was a benefit of being in the EU.
Any UK IFA firm that wishes to carry on business with clients in an EU country such as Spain, will need to be authorised by the regulator of that country to be able to do so.
The options an adviser may have are to:
- Get approved to advise in the EU country in which they have clients
- Partner up with a firm that is already established in the EU
- ‘Sell’ their EU based client to an EU firm of advisers
Getting a financial services licence, is not a quick or straight forward process, and it’s not cheap either, so this will not be viable for most UK financial advisers. This means that many Brits living in Spain and other EU countries who currently have UK financial advisers, will need to find new one.
Brits In Spain With UK Financial Advisers
If you live in Spain and have a UK Financial Adviser, there is a good chance that they are not going to be able to legally carry on as your adviser next year. If they have told you they can, you should ask them to provide you with confirmation of the EU permission that they have obtained.
We have heard of UK advisers that have told their clients that they just need to just use the UK address of a friend or family. The issue cannot be fixed by pretending you live in the UK. If your adviser is not licenced to advise in Spain their Professional Indemnity Insurance will not cover their advice or services. The UK regulator and their insurance provider would certainly take action, if they became aware of advisers doing this.
If you are affected by this or think you may be, and haven’t already spoken to your UK financial adviser you should do so. If you’re not sure what to do or need to find adviser in Spain, we can recommend firms and advisers who are licenced to advise in the UK, Spain and other EU countries.
Please feel free to get in touch and ask to speak to one of our Financial Services Advisers.
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