Brexit saw the loss of European-wide ‘passporting’ permissions for banks. Some banks have taken advantage of this to hike the cost of sending money to and from the UK despite rules intended to limit the cost of cross-border payments.
By Nick Nutter | Updated 8 Mar 2022 | Andalucia | News |
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Brexit saw the loss of European-wide ‘passporting’ permissions for banks. Some banks have taken advantage of this to hike the cost of sending money to and from the UK despite rules intended to limit the cost of cross-border payments.
Photo by Stephen Phillips - Hostreviews.co.uk on Unsplash
European banks appear to be flying in the face of EU payment rules designed to limit the cost of sending money overseas, despite them still applying to the UK. Banks that are part of the Single European Payments Area, of which the UK remains a member after Brexit, are not supposed to charge more for cross-border payments than domestic ones, whether they are made in euros or not.
A British expat living in Spain posted in a Facebook group that his Spanish bank, Sabadell, said after Brexit, 'the UK does not belong to the EU so the fee to transfer any money outside the EU will be 0.75 per cent of any transaction', while it would charge him €18 to receive money from the UK into his Spanish account.
Robin Haynes, the founder of overseas payment service Currency Index said, ‘'it has become apparent that some EU banks have decided to introduce additional charges for payments made to and from the UK. These range from flat fees of around €12 - €18 for receiving a payment, to percentage charges of between 0.3 - 0.5 per cent for sending or receiving larger amounts.’ And added, ‘'The charges vary per bank, and even per customer, so are very hard to predict. Some Spanish banks have been particularly quick to apply charges, but there have been similar reports in other EU countries too.’
Percentage charges could become quite chunky, especially if you are transferring large amounts for the purchase of a property. Even those retired and having to meet the minimum income requirements for residencia will find these charges hurt if they are transferring just short of 2,000 Euros per month from the UK to Spain.
At a recent meeting between a representative of concerned citizens (in Valencia) and the British Consulate, other instances of excessive fees were highlighted including one person charged 3000 Euros for a large transfer in order to buy a property in Spain.
The European Payments Council have been tackled about this problem and said, ‘that while the UK was still a member of SEPA, there was 'no indication' that EU rules limiting the cost of cross-border payments applied after Brexit.’
The Spanish banks are taking advantage of a statement issued by the European Commission in July 2020 that stated, ‘After the end of the transition period, the EU rules in the field of banking and payment services... will no longer apply to the United Kingdom', including ones governing cross-border payments.’
Robin Haynes recommends those sending smaller payments between the UK and the EU should change to doing so quarterly or twice a year, to reduce the number of transfers being made.
He said those who felt the charges were unfair should complain to their bank first, followed by local regulators and then the European Payments Council, which oversees the SEPA scheme the UK remains a member of.
One practical step you can take is to open an account with a currency exchange company. They do charge a commission but often balance that with a good exchange rate.
There are six things you should look for with a currency exchange company;
Cheap fees
Fast transfers
Ease of use
Multiple currencies
Safe and regulated
Great Reviews
One currency exchange company that meets that criteria is Wise (was TransferWise).
Money without borders - instant, convenient, transparent and eventually free. Wise. are powering money for people and businesses in their increasingly global lives - to pay, to get paid, to spend, in any currency, wherever you are, whatever you’re doing.
Wise. state, ‘The main benefit of using your Wise account over traditional accounts is that you won't be charged international transaction fees or outrageous exchange rates. You can send, receive, and convert currencies all in one account. You'll always get the real exchange rate and the lowest possible fees.’
Wise is a global technology company that’s building the best way to move money around the world.
More than 10 million people and businesses have stopped using banks, PayPal and traditional providers, because Wise. is cheaper, faster and easier. Huge companies and banks use Wise technology too; an entirely new cross-border payment network that will one day power money without borders for everyone, everywhere.
Over five million people use Wise, which processes over £5bn in payments every month, saving customers over £1bn a year.
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