EEA-based Brits could lose access to banking and pension services in no-deal Brexit

The guidance admitted that Britons living in the EEA could lose access to UK banking services in the absence of action from the EU.

The guidance says EEA-based customers of UK firms currently passporting into the EEA, including UK citizens living in the EEA, "may lose the ability to access existing lending and deposit services, insurance contracts (such as a life insurance contracts and annuities) due to UK firms losing their rights to passport into the EEA".

This would affect the ability of their EEA customers to continue accessing their services and could impact these firms’ ability to continue to service their existing products.

However Brexit Secretary Dominic Raab described the guidance as "practical and proportionate". He said banks could set up subsidiaries to avoid losing passporting rights, admitting that "there are risks here but let's not have the risks blown out of proportion".

Stephen Jones, chief executive of UK Finance, said: “A ‘no deal’ scenario can and should be avoided. Both the UK and our EU partners should focus on agreeing a managed exit and a clear framework for cross-border trade including in financial services.

“However, it is right that contingency plans are made to minimise disruption for consumers and businesses on both sides of the Channel in the event of a ‘no deal’.

“The government is taking a pragmatic approach to addressing critical cliff-edge issues and to ensure consumers and businesses can continue accessing vital cross-border services.

"However, these issues cannot be addressed by the UK acting alone. It is therefore vital that negotiators on both sides work together to agree solutions that prevent any unnecessary disruption and additional costs for customers in both the EU and UK.”

Chris Cummings, chief executive of the Investment Association, added: “Asset managers have been drawing up contingency plans to ensure they can continue to serve savers and investors in the UK and the EU. The point at which firms will have to activate their irreversible plans is drawing ever closer and failure to reach a deal is in no one’s interest.

“We are pleased to note that the FCA is ready to draw up bilateral Regulatory Cooperation Agreements. These are now urgently needed. We welcome the Treasury’s recently announced plans to allow firms relying on EU27 passports to offer services to UK clients, ensuring access for UK consumers to EU27-based funds will not be impacted in the event of a no-deal Brexit. Firms now need to see similar commitments and public statements from European authorities.

“The most important step to protect our industry, and more importantly, the savings of millions of people across Europe, is for a comprehensive deal to be completed by March 2019.”