There are over 300,000 British nationals living in Spain today enjoying the Iberian sun. In total, in the rest of the world, there are five million British nationals currently living away from the UK. For those individuals, their banking options are reducing, making things more difficult for them. Over the last couple of years, changes in international banking law have had a negative impact on the banking options for UK expats, not just in Spain, but all over the world.

‘UK resident’ rule

The major change that has been affecting British expats and their banking arrangements is the ‘UK resident’ rule that banks have had to adopt since the change in international law came about. There are now no major onshore British banks that will take deposits from expats if they cannot provide a UK residence address. That is a huge issue because many British expats sold their UK homes and moved abroad permanently.

Any existing customers who open up new accounts in the UK and then move abroad are at risk of having their accounts closed or being held to stringent, new conditions. In a shocking development, expat customers of Barclays found in 2015 that they were being asked to deposit £100,000 into their account or it would be closed. Those were expats based in Cyprus, but Barclay’s said that it would also happen to other expats.

The restrictions also apply to expats who wish to want to move their money to a different account with the same bank in order to benefit from better interest rates. In 2014, 49 expats were so outraged by their treatment that they complained about their troubles with the banks to the Competition and Markets Authority.

The Panama Papers

The Panama Papers release was a leak of 11.5 million documents from Mossack Fonseca, a Panamanian law firm, that pertained to the issue of global tax avoidance. They concerned the details of offshore entities owned by various companies and the super-rich. The backlash that followed led to some tightening of offshore banking regulations in order to close loop holes.

This affected some British expats who wanted to bank with companies based in the Channel Islands and the Isle of Man because it has made banks increasingly nervous about taking on clients who do not have a local address. Additionally, banks in such places are also seeing increased regulatory costs for providing accounts for British expats, which is making it an unattractive business prospect for them. Several years of low interest rates is also making it costlier for banks.

Why can’t they just use local banks?

The changes in international banking law are now forcing British expats to use local banks, many of which they will be unfamiliar with. Many people like to stay with the same bank because they often get loyalty bonuses and because it can be a hassle to change. Expats are likely to understand UK finance laws better than at their chosen place of living, plus the stability of the UK makes it a safer place to keep money.

The financial calamity in Spain following the 2008 crash made expats nervous about keeping their money there. People, on average, stay with the same bank for 17 years but some only stay married for 11. It seems we are more loyal to our banks than we are to our spouses.

In addition, while there are no issues with the UK state pension, some company pensions will only pay into British bank accounts. That has meant that some expats have had to get in touch with the pension provider and the banks to work out some sort of deal that will allow them to get their pension paid into their new local bank account.

Many expats are over the age of 65 and are trying to enjoy a retirement, so this kind of pension-related issue can be very stressful.

Banking and financial troubles hang over your head and can ruin happy moments, so it is no surprise that they want the problems resolved as quickly as possible. People have enough to worry about when it comes to finance, such as dealing with the PPI scandal – you can get Lloyds PPI Reclaim help if you believe you have been mis-sold PPI.


This is a serious problem for UK expats who have moved abroad for the next stage of their lives. It is particularly difficult for those who are retired and are meant to be taking it easy. When international laws are changed, it can sometimes be hard to imagine the knock-on effects for ordinary people.