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Changes to financial regulation laws following the UK’s departure from the EU have a serious impact on hundreds of thousands of British expats living in Europe.

Worryingly, many seem unaware of how their wealth management is impacted – or what the long-term ramifications could be. While we’re all now accustomed to a post-Brexit world, professional financial advice is one glaring sector that is, perhaps, yet to recognise the full impact.

Over the first few months of 2021, the Chase Buchanan teams across Europe have consulted with new clients who had not received any notification that their affairs were:

  • No longer being managed.
  • Being managed with zero regulation – and therefore no insurance or consumer protection.
  • Being managed excluding all overseas assets.

Let’s run through what Brexit means for the UK financial management landscape and the key things you need to know to ensure your wealth and assets are being adequately controlled, with all the vital protections in place.

Brexit and Changes to UK Financial Regulation

In short, the issue here is that many expats live in say, Spain, Cyprus or Portugal but rely on a UK financial adviser. That set-up is not uncommon since a native English speaker and UK citizen may feel more comfortable with a British financial advisory service, where they don’t need to worry about anything being lost in translation.

However, a severe problem now arises where a UK national lives in an EU country. Until 1st January 2021, they could rest assured that British advisers were authorised to provide professional advice and investment management. Now, that has all changed.

There is NO trade agreement between the UK and Europe related to financial services. For private individuals and businesses in any EU country, that means a wealth manager or investment professional based in the UK cannot now comprehensively deal with their portfolios.

Some financial advisers have been proactive and client-focused when dealing with this drastic change. Chase Buchanan is working with clients who have been notified that their adviser cannot now manage their affairs. Our advisory teams are on hand to provide consultations and complete portfolio assessments to ensure a smooth and seamless transition in any such cases.

Others have not been as forthcoming. The crisis arises where high-value asset portfolios or pension funds are suddenly being dumped without warning, without planning and without any opportunity to prepare for any adverse market changes – which are inevitable in this period of upheaval.

Why EU Assets Require European Financial Advice

Currently, around 785,000 British citizens live in an EU country, with a further 100,000 in Ireland. With close to a million UK nationals’ resident in a member state for the long-term, this is no small matter.

A phrase you may have seen in the media called ‘passporting’ formerly meant that cross-border transactions were permitted to and from the UK as an EU/EEA member country. The Financial Conduct Authority (FCA) operated under the same rules as European regulators, and so financial activity and consumer protection aligned throughout the bloc.

Given that passporting is now not permitted and no financial services agreement has been reached, there are multiple potential impacts. These may be severely detrimental to portfolios, savings and retirement funds that have been built up over years of diligent effort:

  • Expats may be unaware that their assets are now under no financial management. That could mean sudden and potentially dramatic reductions in asset value if crucial investment decisions are not made.
  • Exposure to changing tax regimes and charges, many of which have changed substantially for expats living overseas.
  • Unregulated advice, where a UK adviser continues to control some aspects of a portfolio belonging to a client living in Europe. Unregulated means uninsured and a risk of financial losses without any compensation. Consumer protections and insurances do not apply to financial services outside of the Financial Conduct Authority’s remit.

Here at Chase Buchanan, our primary focus is to ensure that expats worldwide are aware of this looming crisis – which may not come to light for some months until financial returns begin to dwindle or pension pots decrease in value.

It may also impact UK nationals living outside of Europe, depending on their domiciliary status and location of assets, such as offshore savings accounts or pension schemes.

Thousands of UK Expats potentially Left with Unmanaged or Uninsured Funds

Leaving funds without any professional management is not an option. Investment advice, succession planning and tax strategies are vital for expats to secure their financial future and ensure their lifetime savings are working hard to provide them with a comfortable way of life.

Unless or until a financial services trade agreement is reached, there is a substantial risk exposure for any British expats who have previously relied on a UK financial adviser or wealth manager to protect their income and portfolio value.

Another issue arises where unregulated advice is being offered:

  • EU institutions may refuse to accept instructions from any UK adviser.
  • Financial regulators in some EU countries, including France, have legislated that it is illegal for insurance firms or banks to do any business with organisations of professionals not authorised and registered in the country.
  • New products are heavily restricted. For example, the Central Bank of Ireland has granted a grace period of three years for existing insurance contracts. Still, it has banned any UK entity from renewing a policy or taking out a new one.

EU regulators across Europe are taking a similar stance. So, it is crucial to act now if you have any doubts about the ongoing management of your funds and whether any current adviser is rightfully permitted to do so.

Chase Buchanan is an international wealth management provider with comprehensive accreditations and authority to provide professional financial management services across Europe. With offices in Cyprus, Belgium, Portugal, Spain, and our UK Administration Centre, our highly qualified advisers are committed to ensuring all clients, existing and new, have the knowledge and tools they need to make sound choices for the future.

Should you have concerns about the legitimacy of your fund management or require independent advice to ensure your assets are appropriately safeguarded, please get in touch.