Featured Product

    EBA Urges Firms to Finalize Preparations for End of Brexit Transition

    July 29, 2020

    EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting. EBA calls on the institutions to finalize the full execution of their contingency plans in accordance with the conditions agreed with the relevant competent authorities and to communicate adequately with the concerned customers in EU. On July 07, 2020, EC had also notified its stakeholders that, from January 01, 2021, the UK-based financial institutions that do not hold valid authorization from the competent authorities in EU will lose their authorization to provide services in EU.

    Finalization of preparations and authorizations with relevant competent authorities in EU

    To continue to provide services in EU, relevant UK-based financial institutions need to ensure that they have appropriate authorizations from EU competent authorities, including for their existing branches operating in EU, and fully establish those operations. Financial institutions should ensure that associated management capacity, including appropriate technical risk management capabilities, is effectively in place ahead of time. Moreover, financial institutions should not outsource activities to such an extent that they operate as "empty shell" companies, but are expected to increase their EU footprint, including their local resources in proportion to the amount of business being conducted in and from EU. Financial institutions should focus on areas where further action stills needs to be taken—namely, changing and moving contracts and clients, systemic exposures to UK-based financial market infrastructures, and access to funding markets, including possible related capital impact. Institutions should also take necessary actions to address impact on rights and obligations of their existing contracts, specifically the derivative contracts. In their preparations for the end of the transition period and ramping up their EU operations, financial institutions should duly comply with all applicable EU legislation and pay attention to prudential, consumer protection, and anti-money laundering and countering financing of terrorism (AML/CFT) requirements.

    Preparations by payment and electronic money institutions

    Contingency plans remain especially relevant for payment and electronic money institutions, where many services in EU have been provided by the UK-based institutions on a cross-border basis benefiting from the EU passporting arrangements. UK-authorized payment and electronic money institutions that wish to continue to offer services to EU-based customers, after December 31, 2020, need to be adequately authorized beforehand by an EU competent authority. As a condition of authorization, relevant UK-based payment and electronic money institutions are required to submit application documents that are compliant with the EBA guidelines on authorization and registration under the revised Payment Services Directive (PSD2). Furthermore, account information service providers and payment initiation service providers registered or authorized in the UK will no longer be entitled to access customers’ payment accounts held at the EU payment service providers and their PSD2 eIDAS certificates under Article 34 of the Commission Delegated Regulation 2018/389 will be revoked.

    Communication to customers

    Financial institutions affected by the withdrawal of UK from EU should provide adequate information to their customers in EU regarding the availability of services after the end of the transition period. Institutions ceasing their activity should inform the EU-based customers in due time (before the cessation) about the effect of cessation on the provision of services and the way to exercise their rights, to avoid any detrimental effects for clients. If EU-based customers have concerns about whether they may be impacted by the withdrawal of UK from EU and they have not been contacted by their financial service providers until now, the customers have the right to contact financial institutions and their respective competent authorities directly. 

     

    Related Links

    Keywords: Europe, EU, UK, Banking, Brexit, Transition Period, Passporting, Contingency Plans, Authorization Applications, PSD2, EC, EBA

    Related Articles
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    ECB to Consider Climate Risks When Reviewing Collateral Framework

    In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.

    September 17, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    ACPR Publishes Corrective Version of RUBA Taxonomy

    The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7487