With just a week to spare before the Brexit transition period between the UK and European Union (EU) comes to an end, the UK government has agreed a trade deal with the EU.
While much has been made of the repercussions of Brexit, how will it really impact your finances? It’s too early to predict exactly what to expect, however some leading banks were already reacting, even before the deal was agreed.
Ahead of the transition period ending on 31st December, Santander laid out changes to its mortgage lending criteria. From 6th December 2020, borrowers who are citizens of the European Economic Area (EEA) and applying for a mortgage with over 75% Loan to Value (LTV) will need to prove their permanent right to reside in the UK.
The new rule excludes citizens from the Republic of Ireland however it will also be applicable for applications for buy-to-let loans where the eligible income requirement is £25,000. All borrowers for buy-to-let mortgages must be a UK resident.
Santander were not the only leading lender getting ahead of the transition period ending. The Financial Conduct Authority (FCA) had warned firms to begin preparing for the changes ahead. When the transition period ends, EU laws will no longer apply and passporting will also come to an end.
In messaging to lenders sent out ahead of a trade deal being struck, the FCA said that banks and lenders should ensure they are aware of various changes including:
- The FCA would be implementing the Temporary Transitional Power to provide them with more time to comply with a large number of changes.
- There are a number of key requirements that firms must comply with by 1st January 2021, these include secure communication and customer authentication.
- Any firms who are intending to provide services that are currently covered by a passport will need to ensure they are able to do so after the end of the transition period.
The FCA also made it clear that any lenders who currently rely on passports to provide services to or from the UK and who are intending to withdraw these services when the transition period comes to an end, must ensure the right outcomes for their customers and aptly supply them with the right information to ensure they are able to make informed decisions.
Executive Director of International at the FCA, Nausicaa Delfas, said: “Firms need to make sure they are prepared for the end of passporting and for the new financial services landscape after the end of the transition period.
To help minimise disruption, we have on-shored EU legislation and established temporary regimes to allow non-UK firms and funds to operate in the UK after 31 December 2020.
We remain committed to open markets, international cooperation and high international standards of regulation.”
With a trade deal now agreed between the UK and EU it’s likely that many leading banks and lenders will be looking closely at their policies and plans over the coming weeks, something that UK citizens who currently live within the EU should pay close attention to.