Featured Product

    PRA and FCA Address Insurers on Preparing for End of Brexit Transition

    October 21, 2020

    PRA and FCA jointly issued a letter to the chief executive officers of all insurance firms on the importance of being prepared for the end of the transition period to Brexit, to minimize disruption and ensure market stability. The letter, from Anna Sweeney and Charlotte Gerken at PRA and Matt Brewis at FCA, sets out key areas requiring final preparations for the end of transition period. The key areas include contingency planning and continuity of cross-border business in respect of EU liabilities; legislation related to Part VII "saving provision"; cross-border personal data transfer laws; bank account closures and passporting firms in European Economic Area; and Part 4A application submission timeline of the Temporary Permissions Regime firms.

    The following are the key highlights of the joint letter:

    • Contingency planning and continuity of cross-border business in respect of EU liabilities—Firms intending to run-off their remaining liabilities relying on EU run-off regimes where these are available or seeking to transfer their EU liabilities to an EU-authorized insurer should ensure that they finalize preparations and implement suitable and realistic contingency plans in advance of the end of the UK transition period. Firms should proactively continue to discuss their contingency plans, as well as any associated risks with the relevant EU authorities, to ensure that they remain satisfied with them.
    • Legislation related to Part VII "saving provision"—Parliament has legislated for a Part VII saving provision. This will provide up to two years from the end of the transition period for parties to obtain a UK court order sanctioning the transfer of insurance business. Firms should note that the mutual recognition framework contained in the Solvency II Directive will not apply to insurance business transfers sanctioned by the UK courts after the end of the transition period, even if they fall within the saving provision. Therefore, insurers that intend to rely on the saving provision as part of their contingency plans should continue to engage proactively with the relevant European Economic Area authorities.
    • Cross-border personal data transfer laws—In the absence of a decision by EC on UK data protection adequacy, the use of standard contractual clauses in relevant contracts is one of the available ways that the European Economic Area firms can comply with the cross-border personal data transfer laws of EU, after the expiry of the transition period. Firms may need to consider whether contracts involving the transfer of personal data to their firms from the European Economic Area need to be updated to comply with EU requirements or to consider other appropriate measures. This could include reviewing the position for EU vendors or third parties on which services of firms rely.  
    • European Economic Area bank account closures—The ability of UK banks to continue providing services to customers resident in the EU will be determined by national regimes. If firms have customers in the EU who are reliant on UK banks accounts that may be closed, firms will need to review their capability to make and receive payments to and from an overseas account. Firms will also need to identify impacted customers and work with them to implement alternative arrangements if necessary so that they can continue to benefit from their insurance product. FCA expects firms to communicate with their customers in a timely and supportive manner.
    • European Economic Area passporting firms—On entry into the Temporary Permissions Regime at the end of the transition period, the European Economic Area passporting firms will obtain deemed temporary Part 4A permission to operate in the UK pending permanent authorization as Third Country Branches with a Part 4A permission. PRA and FCA have set out information for firms using Temporary Permissions Regime on their websites. This includes information on the rules that will apply to firms in the Temporary Permissions Regime and considerations for firms leaving the Temporary Permissions Regime. PRA and FCA will also continue to work closely with firms regarding their applications for permanent authorization. In addition, the Financial Services Contracts Regime (FSCR) will enable the European Economic Area passporting firms that do not enter the Temporary Permissions Regime to wind down their UK business in an orderly fashion.
    • Part 4A application submission timeline for Temporary Permissions Regime firms—In August 2019 and June 2020, PRA had sent information requests to every firm that had notified into the Temporary Permissions Regime but had not provided a Part 4A application asking when they intended to submit a Part 4A application. PRA is now planning its review activity based on the dates provided by the Temporary Permissions Regime firms. Therefore, it is important for a Temporary Permissions Regime firm to submit the Part 4A application during the quarter previously notified to PRA. 

     

    Related Links

    Keywords: Europe, UK, Insurance, Brexit, Operational Risk, Brexit Transition, Temporary Permissions Regime, Passporting, Solvency II, PRA, FCA

    Featured Experts
    Related Articles
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EBA Publishes Single Rulebook Q&A Updates in February 2021

    The EBA Single Rulebook question and answer (Q&A) tool updates for this month include answers to ten questions.

    February 26, 2021 WebPage Regulatory News
    News

    ESMA Releases Schema and Instructions for Securitization Reporting

    ESMA updated the set of questions and answers (Q&A), along with the reporting instructions and an XML schema for the templates set out in the technical standards on disclosure requirements, under the Securitization Regulation.

    February 26, 2021 WebPage Regulatory News
    News

    EU Rule Amends Requirement for European Single Electronic Format

    EU published Regulation 2021/337, which amends the Transparency Directive (2004/109/EC), regarding the use of the single electronic reporting format for annual financial reports.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6637