Bank Of England Will Soon Update Insurers, Banks On Latest Brexit Approach
The Bank of England said it would update banks and insurers next week on its approach to Brexit given that Britain and the European Union have now adopted a transition agreement.
“The Bank of England welcomes the conclusion of the EU Council that there should be a transition period following the withdrawal of the UK from the EU,” a Bank of England spokesman said on Friday.
“In light of the conclusions of the EU Council, we will provide an update on our regulatory approach to preparations for the EU withdrawal next week.”
The Financial Conduct Authority of Great Britain also said that it welcomed the agreement, but did not mention the updating of the companies it regulates.
Banks and insurers operating in Britain are making changes, such as the opening or expansion of centers in the EU, to ensure that they can still serve customers of the block after Brexit next March.
EU financial firms operating in London are also waiting to see if they can continue as branches or have to become subsidiaries, an expensive company.
“Companies do not want to take unnecessary and costly steps to prepare for a result that may never materialize,” said Miles Celic, executive director of TheCityUK lobby.
“The regulators, guided by a strong political agreement, should give companies time to wait and see what the final agreement will be like before they have to take additional contingency measures.”
European regulators, however, have so far remained silent about whether reassuring banks is a regular business during the transition period, which means they do not have to rush Brexit’s plans.
The European Central Bank, which regulates the main lenders in the euro area, repeatedly urged British banks to accelerate license applications for EU centers to avoid being stuck in a bottleneck before the Day of the European Union. Brexit
EU leaders on Friday approved a “stalled” transition period until 2020, but some European regulators have noted that it will not be ratified until much later in the year as part of a broader withdrawal agreement, which could be derailed by other issues such as Britain’s future border relations with Ireland.
The financial sector wants regulators in Britain and the EU to say they do not have to fully implement Brexit plans by next March and that derivatives and cross-border insurance contracts remain valid.
“It will now be important to have clarity from the regulators regarding their expectations in light of the agreed transition period,” Simon Lewis, executive director of AFME, a body in the European banking industry.
Chris Cummings, executive director of the Investment Association of Great Britain, which represents asset managers, wants regulators to clarify how they will interpret the political agreement on the transition.
“This means holding substantive discussions on regulatory cooperation agreements so that companies know they can continue to serve savers and investors across Europe through Brexit and beyond,” Cummings said.
Lewis, of AFME, said that the current draft of the withdrawal agreement does not address the continuity of cross-border contracts, access to market infrastructure, such as clearing houses, nor guarantees the flow of data between Britain and the EU.