European Banking Authority Issues Opinion on Preparations for the Withdrawal of the UK from the EU

It has been clear for some time that financial institutions likely to be impacted by Brexit need to be prepared. The European Banking Authority’s (“EBA”) recent Opinion (available here), sets out its view that not enough has been done. Indeed, the EBA’s view is that firms must now consider the potential impact of a ‘hard’ Brexit on their business and take necessary steps to prepare for such an eventuality, rather than rely on political developments to solve the issue.

Since the Opinion was published the UK Government has issued its statement from Chequers on 6 July 2018 (available here). If anything, the uncertainty surrounding the UK position on services and the lack of a legally binding transition period only serve to emphasise the EBA’s warning that preparations for a hard Brexit should be pursued sooner rather than later.

A summary of the key points from the Opinion and our conclusions are set out below.

Executive summary
On 25 June 2018, the EBA published an Opinion on preparations for the withdrawal of the United Kingdom from the European Union.

The EBA is focused on the level of preparedness of financial institutions (see “Scope”, below) for Brexit, particularly with the possibility of no ratified withdrawal agreement being in place (and thus no transition period) by the 30 March 2019 deadline. The Opinion effectively presents a warning for firms to progress or, if they have not already done so, to commence Brexit planning for a worst case scenario and warns that financial institutions should not rely on public sector solutions, as they may not be proposed and/or agreed. The EBA finds that current preparations are “inadequate”.

The EBA states that mitigating actions should be pursued by financial institutions without delay. The Opinion also gives details of the risk assessments and preparedness competent authorities should require of financial institutions, as well as including an express requirement to notify competent authorities of assessments, plans and customer communications.

The EBA has also set out requirements to provide clear information to customers whose contracts or services may be affected, as soon as that information becomes available to them, and in any event no later than the end of 2018.

 

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