The UK’s financial services structure would need to be changed to reflect the fact that the UK will no longer be inside the EU’s framework for such services.
Aside from bringing EU financial services legislation into domestic law in time for a March 2019 exit, the Government’s technical notice on this sector also proposes a new economic and regulatory arrangement with the EU – that would maintain the benefits of cross-border provision of the most important international financial services traded.
Their approach to financial services will be to treat European Economic Area (EEA) states largely as we currently treat other third countries, except where a different approach is necessary to manage the transition to a stand-alone UK regime.
For example, a Temporary Permissions Regime (TPR) will allow EU firms and funds passporting into the UK to continue providing services here for a limited period after exit.
However, the government admits that individual and business customers of UK-based payment services “could face increased costs and slower processing times for euro transactions”.
The EU ban on charges for the use of banking cards for cross-border transactions (including online shopping) would disappear too, which basically means a costs rise for all businesses.
It also adds that UK citizens abroad – who still have a bank account in the UK – “may lose the ability to access existing lending and deposit services, insurance contracts (like life insurance contracts and annuities) due to UK firms losing their rights to passport into the EEA”. Most worryingly, access to their pension income could all be affected.
Additionally, the Northern Ireland situation is still potentially a big stumbling block to a no-deal and yet the government offered little comfort to businesses trading between the region and the Republic of Ireland, only saying: “We would recommend that, if you trade across the land border you should consider whether you will need advice from the Irish government about preparations you need to make.”
So, potentially lots more answers that questions when it comes to finances, so watch this space for further details and advice – as Brexit Decoded’s champions and ambassadors are certainly on the money!