Financial services are a vital component of all businesses’ supply chains. A no deal Brexit would result in banking, insurance and financial services providers facing restricted access to the EU. All businesses should understand what no deal means for how they access financial services in the UK and the EU in case they need to take action to avoid disruption, such as making changes to contracts.
Key challenges for business
How will UK financial services firms access the EU?
In the event of no deal, UK financial services firms will overnight lose the ability to access the Single Market through the ‘passport’ which allowed them to provide services into any other EU Member State (once it has been authorised in one EU member state including the UK). UK financial services firms will no longer be able to provide regulated activities from the UK into the EU. They will be required to adapt their business models or cease providing such services to citizens within the EU27 and EEA unless they establish a third country branch or subsidiary within the EU, or utilise the various contingency measures that have been adopted by the EU or EU Member States.
How will EU financial services firms access the UK?
The UK has established the Temporary Permissions Regime (TPR) to enable EEA firms which currently operate within the UK (using the EEA passport) to continue to do so for a temporary period (expected to be a maximum of three years).
How will this impact the economy?
Financial services firms play a crucial role in enabling growth across the economy, helping households save and invest by providing everyday services such as bank accounts and mortgages, and channelling much-needed capital for businesses to grow through lending or access to capital markets. A number of financial services firms are concerned that any loss in market access will have a long-term detrimental effect on the future of financial services which will have a wider impact on the UK economy.
Key questions for business to consider
Continuity plans for no deal will be unique to every organisation. However, there are some key questions your plan should answer, to ensure the major issues are covered.
- Have you engaged with your finance providers to understand the impact of no deal and to ensure that the impact of no deal will be minimised?
- Have you considered potential contractual issues to ensure that any contracts can continue to be serviced? If your finance providers have requested changes to your contracts, have you approved the changes to allow them to continue to service your contract?
- Will your intra-group transactions between UK and EU entities be impacted by Brexit?
- Have you considered the changes to cross border insurance?
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Preparing for no deal: the changes for financial services
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Other resources to help you plan
Read about providing services in each of the EEA nations here.
If you operate in financial services, read the government’s no deal technical notice for banking, insurance other financial services in a no deal scenario here.
If you operate in financial services, check guidance from the Financial Conduct Authority here.
If you are a business customer using financial services, refer to UK Finance’s Brexit microsite: Let’s Talk Business.
If you are a consumer or saver, read the Building Societies Association FAQ.
The Association for Financial Markets in Europe has a webinar on ensuring operational readiness for a no deal Brexit.
Worried about travelling to the EU in a no deal scenario? The ABI has a useful guide.
If you’re concerned about travel and motor insurance, read the British Insurance Brokers’ Association advice here.