HM Treasury has submitted draft regulations outlining temporary permissions for incoming financial services firms currently operating in the UK from European Economic Area (EEA) member states, in the event of a “no deal” Brexit.

Currently, the EU passporting regime allows financial services firms operating from any EEA member state to conduct permitted business activities in any other member state and ideally, these will continue for a transitional period following UK withdrawal which will allow firms to make alternative arrangements. A “no deal” Brexit would end current arrangements abruptly on exit day.

The draft regulations, known as the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018  are currently under consideration in Parliament. The intention of the temporary passport regime is to allow EEA financial services firms who are currently operating in the UK to continue to conduct business with current permissions for a defined period of time following a “no deal” arrangement, allowing firms time to seek arrangements to obtain UK authorisation.

The Financial Conduct Authority and the Prudential Regulation Authority have also recently released statements and will also be consulting on temporary measures. 

Whilst we are uncertain what the extent and impact of Brexit will be, it is promising to see that regulators and the government are working alongside one another to produce various measures to ensure some initial stability and temporary certainty for the insurance industry. 

While the impact of Brexit is still unfolding, there's no doubt that it will change the way insurance operates for UK citizens. Stay on top of these and other changes in insurance regulation across the world with our insurance regulation alerts.