There has been some recent consternation from advisers about greater difficulties trying to secure UK expats residential mortgages in this country, because of lenders withdrawing the proposition. I suspect this is more to do with short-term regulatory caution, than anything else.
However, it’s clear the passporting system – which allowed firms in the UK to carry out activities in another EU member state – is no longer available.
And the fact the trade deal didn’t include financial services means that firms are having to provide ongoing services based on local law and regulation in each country.
That has probably resulted in some lenders deciding ‘not to go there,’ at least for the short-term, while they work out what regulatory risks and responsibilities they have in providing products to customers in those jurisdictions.
You might well have read of some expat customers having their bank accounts closed, and this ties into the same issues banks and other lenders are grappling with.
The Association of Mortgage Intermediaries (AMI) factsheet covers off a number of key areas particularly the loss of passporting, data protection and employing EU citizens in the UK.
It will be regularly updated and, if you are a firm, which has traditionally provided advice services to clients in other countries it is certainly one to keep abreast of.
Taking back control?
Part of the whole Brexit conundrum was to what extent the UK would take back control?
Now that has happened, in our sector there is likely to be a growing debate around the extent to which the UK might want to row back on those parts of the mortgage process that were introduced through EU law.
For instance, there was much debate at the time around whether the ESIS added anything to the UK process over and above what we were already delivering from our Key Facts Illustration (KFI).
The general answer tended to be, not much, and I see there is already some support for a return to the KFI, with the ousting of the ESIS.
Part of me feels that, certainly at this time, there is little point in making that move, not least because of the anticipated costs in moving back to the previous regime, especially in terms of what would be required in widespread system changes.
AMI suggests the cost would be in the region of £20m to do this – I tend to agree that, particularly now, that doesn’t seem like a hill worth dying on.
However, in the future, that argument might shift and we should perhaps prepare for a re-evaluation of the UK process, and whether it is worth keeping those parts which were introduced only because of the UK’s EU membership and commitments.
We could be some way away from it, but one might believe that further change is likely, especially if the benefits are deemed to have been very slim, or indeed, non-existent.