Statement - Central Bank of Ireland welcomes the European Supervisory Authorities’ publication of Brexit Opinions

The Central Bank of Ireland (Central Bank) welcomes the publication by the European Supervisory Authorities (ESAs) of Opinions on the impact of the United Kingdom (UK) withdrawing from the European Union (EU).

Derville Rowland, Director General Financial Conduct, said:

“The ESAs’ Opinions are a timely reminder to financial institutions and in particular to banks, insurers, brokers and investment firms, to ensure they have put appropriate plans in place for Brexit. We expect that firms consider the implications of Brexit and ensure they have robust contingency measures to minimise the impact on their customers, investors and markets.’’

The European Securities and Markets Authority (ESMA) has reminded regulated entities of the need to make timely submission of requests for authorisation in the context of the UK withdrawing from the EU. ESMA has noted that, as there is no assurance that a transition period will be agreed, entities need to consider the worst-case scenario where a hard Brexit would take place on 30 March 2019.

The European Banking Authority (EBA) has published an Opinion relating to the risks posed by lack of preparation of financial institutions for the withdrawal of the UK from the EU. Financial institutions must take practical steps now to prepare for the possibility of a withdrawal of the UK from the EU with no ratified Withdrawal Agreement in place and no transition period.

The European Insurance and Occupational Pensions Authority (EIOPA) has published an Opinion on the obligations of insurance undertakings and insurance intermediaries to inform customers about the impact of the withdrawal of the UK from the EU. 

The principles of having robust contingency measures and informing customers of the potential impacts of Brexit on their financial products and services apply to all financial institutions with cross-border business¹ / customers. In relation to the risk of service continuity of insurance contracts post-Brexit, insurance undertakings and insurance brokers must take all necessary steps to prepare for the UK’s withdrawal from the EU. While the Central Bank acknowledges that the vast majority of firms are responding to the regulatory requirements to put plans in place to ensure service continuity, it reminds insurance undertakings and insurance brokers of their key obligations in this regard, namely to:

• Take appropriate contingency measures to ensure the continuity of services for cross-border insurance contracts between the UK² and other Member States of the EU.
• Make customers and beneficiaries aware in a timely manner of the implications of these contingency measures both for existing and for new contracts concluded before the withdrawal date.
• Provide customers with clear information on the contingency measures taken or planned and on their impact on insurance contracts.
• Inform new customers about the impact on their contractual rights and on the provision of insurance services that may emerge from the withdrawal of the UK from the EU.

In the context of a possible hard Brexit, the Central Bank specifically reminds insurance undertakings and insurance brokers of their responsibility to inform customers about the possible impact on insurance contracts. In particular, the Central Bank expects insurance brokers to ensure that contracts can continue to be serviced after the UK’s withdrawal from the EU.

The Central Bank is active at ESA level and in EU Brexit forums across the full range of issues within its mandate. In relation to consumer protection, the Central Bank is seeking to ensure consistent and predictable consumer protections, and will continue to work with financial institutions and at EU level to drive firms toward preparedness so that consumers are protected regardless of the outcome of the UK / EU negotiations. The ESAs’ Opinions reflect the views expressed consistently by the Central Bank in relation to the steps that financial institutions need to take to prepare for the UK’s withdrawal from the EU. 

Notes:

¹ EU27 financial institutions passporting into the UK / Gibraltar or UK / Gibraltar financial institutions passporting into EU27 countries.

² Including cross-border insurance contracts between Gibraltar and other Member States of the EU.

EIOPA Opinion

EBA Opinion

ESMA Opinion