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UK Savers Depositor Protection To Change in a Post-Brexit World

Savers remain in the dark regarding the depositor protection of their monies held with European banks in a post-Brexit environment, despite the deadline moving but nearing all the same. Here MD of Cascade Cash Management, Dr Emma Black, highlights what we can expect, should Brexit occur anytime soon.

As it stands, European banks are able to “passport” their permissions within the European Union (EU) across member states. Authorisation from an individual member state is tied to EU directives that permit banks and other financial services firms to distribute banking, saving or lending products and services across other member states in the EU. This allows the likes of France’s RCI Bank and Sweden’s Ikano Bank to offer savings products to UK depositors.

The savings rates on offer from European banks have typically been higher to compensate UK savers for the potential additional administration in the unlikely event that they would need to claim from the French or Swedish depositor guarantee schemes as opposed to the Financial Services Compensation Scheme (FSCS) should either bank fail.

RCI Bank famously held the market leading Instant Access rate for new depositors for 48 weeks with their Freedom Savings account when they first launched in the UK market. RCI Bank was protected under the French depositor guarantee scheme but is now protected under the FSCS since obtaining its UK banking licence against the Brexit backdrop.


Such rates have attracted many UK savers who are now left wondering what will happen to the protection of their monies in the event of a “no-deal” or “disorderly” Brexit. Dr Emma Black said:

“It is understood that the government intends under the scenario of a “no deal” or “disorderly” Brexit to enact a ‘Temporary Permissions Regime’ under which firms that are already authorised to operate financial services within the UK market could continue to do so for a period of three years post-Brexit.

“Many European banks intending to continue operations in the UK have already begun to apply for UK banking licences such that once a direct UK authorisation was achieved, depositors would become covered under the FSCS rather than the bank’s home country depositor protection scheme thus providing the most clear-cut solution. As an example, RCI Bank have confirmed that they have now obtained a UK banking licence, approved and effective from 14th March 2019, meaning that its UK customers are now protected under the FSCS.”

For those European banks that do not intend to achieve direct UK authorisation, it is understood that there will be an orderly process behind the winding up of UK operations such that no immediate withdrawal of services will occur on a date set for Brexit going forward.
In this scenario, UK consumers would be notified in due time to allow for a withdrawal of their deposits in the event that their protection would change.

Cascade Cash Management has written to European banks operating in the UK market and can keep customers updated as we approach any given deadline. Emma concluded:

“We take deposit security very seriously and have been keeping close tabs on which of the banks are operating in which way to prepare for Brexit. We are happy to talk to anyone with concerns and give independent solid advice.”

Cascade Cash Management (Cascade) is an independent and transparent service created to generate enhanced cash returns and increase protection on deposits through professional cash management.