London has been a European financial hub for many years with most banks and insurers having at least a regional headquarters in the British capital if not a global HQ. But how will things change for the financial services industry in Britain after Brexit? Will British financial institutions still be able to serve overseas customers, and will British ex-pats based in Europe be able to hold onto the financial products they have with British financial institutions? A recent article by Intasure provides the answers.
Current Arrangements for Financial Services Firms
The current arrangements through the European Union is that any financial services company that is authorised in an European Economic Area (EEA) country can conduct business in its own authorising country and any other country in the European Economic Area by either opening a branch in that country, using an agent authorised in that country or by providing cross border services. This agreement within the European Union is called passporting and applies to banking, insurance and other financial services.
What Will Happen After Brexit?
Following Brexit the passporting arrangement will no longer apply to UK companies so the branches they have set up in other European countries won’t be able to operate, agents previously contracted will cease to trade with them and cross border products will no longer be available. So if you’re living in Europe and have financial products with British banks and insurers does that mean that you can no longer use those products?
Well, not surprisingly the large financial institutions have been preparing for Brexit for as long as it has been on the agenda, which as we all know has been several years now. It will come as no surprise when it finally happens, so many of them have already made arrangements for customers to not be affected by the Brexit finalisation.
Companies like Barclays and RBS have subsidiaries which are based in other European countries, which they have subsequently expanded and shifted customers products over to so they can be provided with the products ongoing through the passporting arrangement. Barclays has Barclays Bank Ireland set up which will remain in the EU as Ireland will. RBS has NatWest Markets NV based in the Netherlands for the same purpose. So if you live outside the UK and have products with either of these two providers then you will probably have noticed that your product has been switched to be represented by these European partners instead. If not enquire with your provider and you will probably find they have an arrangement in place.
What about insurance? Well, if you have buildings insurance it will be from a company in the country in which you reside so don’t worry about that. With travel insurance you should be similarly unaffected by the change as your cover will be provided by a company in which you are resident. However travel insurance companies are expecting more claims during the Brexit period due to border closures and strikes.