On 29 March 2017, the United Kingdom (UK) notified the European Council of its intention to withdraw from the European Union (EU), a process known as Brexit. On 11 April 2019, the European Council decided, in agreement with the United Kingdom, to extend further the two-year period provided for by Article 50(3) of the Treaty on European Union, until 31 October 2019.
The Financial Supervision Commission (FSC) is part of the European System of Financial Supervision composed by the Financial Regulators of the EU Member States, the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), the European Banking Authority (EBA), the European Systemic Risk Board (ESRB) and the Joint Committee of the European Supervisory Authorities. In its preparation measures FSC is working in close cooperation with the other national competent authorities form the EU and with two of the European Authorities – ESMA and EIOPA.
ESMA and EIOPA are making preparations to ensure that they continue to deliver its mission to enhance investor protection and promote stable and orderly financial markets after the UK leaves the EU.
ESMA has initiated a systematic analysis of the potential impact of Brexit for European securities markets, and is preparing for the different possible scenarios linked to the UK’s withdrawal, including the possibility that the UK leaves the EU without a deal.
EIOPA has issued Recommendations for the insurance sector in light of the United Kingdom’s withdrawing from the European Union. They follow a series of Opinions, which EIOPA developed to promote consistent supervisory practices in matters related to the consequences of the UK’s withdrawal from the European Union.
ESMA and EIOPA regularly publish important notices on Brexit for the business and the clients. For more information, please visit:
The European Union is working hard to reach an agreement on an orderly withdrawal, and looks forward to discussing a framework for the future relationship with the United Kingdom.
However, there is no certainty that an agreement will be reached before the Brexit date – 31 October 2019. And even if an agreement is reached, the United Kingdom’s relationship with the European Union will no longer be one of a Member State and thus, will be in a fundamentally different situation.
FSC urges all market participants, investors as well as consumers to ensure contingency planning with a view to prepare for a potential no-deal Brexit.
Relation with UK authorities after Brexit
The European Securities and Markets Authority and European securities regulators have agreed Memoranda of Understanding (MoUs) with the Financial Conduct Authority (FCA) of the United Kingdom.
The MoUs form part of authorities’ preparations should the UK leave the EU without a withdrawal agreement, the no-deal Brexit scenario. The MoUs will therefore only take effect in the event of a no-deal Brexit scenario. The MoUs are similar to those already concluded on the exchange of information with many third country supervisory authorities.
FSC is part of the multilateral MoU (MMoU) between EU/EEA securities regulators and the FCA covering supervisory cooperation, enforcement and information exchange between individual regulators and the FCA, and will allow them to share information relating to, amongst others, market surveillance, investment services and asset management activities. This, in turn, will allow certain activities, such as fund manager outsourcing and delegation, to continue to be carried out by UK based entities on behalf of counterparties based in the EEA.
Similar memoranda have been concluded with the Bank of England (BoE) for the recognition of central counterparties (CCPs) and of the central securities depository (CSD) established in the United Kingdom, that would take effect should the UK leave the European Union without a withdrawal agreement, the no-deal Brexit scenario.
2. Insurance market
The European Insurance and Occupational Pensions Authority (EIOPA) and all National Competent Authorities (NCAs) of the European Economic Area (EEA) with competencies in insurance have agreed Memoranda of Understanding (MoUs) with the Bank of England in its capacity as the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) of the United Kingdom.
The MoUs take effect should the UK leave the European Union (EU) without a withdrawal agreement, the so-called “No-deal” Brexit scenario.
These MoUs ensure cooperation in the fields of insurance prudential and conduct supervision (‘supervisory cooperation’), for mutual assistance and regular exchange of information with the aim:
To maintain sound prudential and conduct supervision over (re)insurance undertakings and groups based either in the UK or in an EEA member state, with cross-border business activities in the EEA or the UK respectively
To maintain financial stability of the financial markets within the EEA and/or the UK
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