Financial Advice to Our Expat Clients If No Deal Brexit

On 21^st August 2019, the Chancellor of the Exchequer announced new plans to help businesses that trade with Europe to prepare for any October 31st ‘No Deal’ Brexit.  More than 88,000 VAT registered companies across the UK will be allocated an Economic Operator Registration and Identification (EORI) number in the next two weeks in order to keep trading with customers and suppliers in the EU after the UK has left the EU.  What about financial services and ‘passporting’ insurance, investments and financial advice across Europe e.g. our firm advising British expats in Spain, France, Greece etc?

UK Financial Services in Europe

The financial services industry has been given updates from HM Treasury on Financial Services, Banking and Insurance products if there is a No Deal Brexit. 

The Government and Financial Services regulators have put in place EU (Withdrawal) Act legislation and if should there be a No Deal Brexit, they will have a legal and regulatory regime in place for financial services.  All rules will apply pre and post exit in the UK.

Financial services companies that are UK based will no longer be part of the EU’s single market for Financial Services.  This means companies that are UK based will lose access to the EU Passport and result in changes in requirements to firms being able to trade cross-border.

As part of the regime the Government will grant Temporary Permissions and transitional arrangement for European firms and funds ‘passporting’ into the UK.  One of the permissions will be to let EEA firms that do not join the Temporary Permissions Regime be allowed to carry on with business in the UK but only for a limited time after Brexit.  This will allow them to wind down business if they have not applied or where unsuccessful in any application for UK authorization.  The Bank of England, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are already committed to use these new powers.  Firms will be told which areas they need to change in order to comply with the new regulations in time for the exit day this will also allow them to reach compliance.

Guidance Updates also cover:

• Guidance in continuing to provide services to EEA customers, using the EU Passport
• EEA Firms will need to take legal advice and discuss with UK regulators if they still wish to provide services to UK customers
• Preparing a firm for Brexit.  Implementing alternatives ways in sending personal data from the EU to UK.

The Treasury has updated guidance for people, businesses and organisation’s that are UK based that have the following Financial Services products:

• Debit, Credit cards, banks accounts
• Retirement income products e.g. annuity or personal pension plans.

The guidance updates do say most people will see no or limited difference in financial services products after the Exit.  They will need to check and take any required action on their bank accounts, pensions and insurance. 

Financial services firms, including ours, are taking measures to ensure they can provide services after the UK leaves the EU to UK/EU citizens living in the EU, Norway, Liechtenstein and Iceland.  They are being supported by some EU countries that want financial services firms to be able to continue to provide a service to their existing customers after Brexit.

Comment

The reality is that it is still an absolute mess with many EU countries still having not confirmed that they will allow EU residents continued contact with their UK firm during the transition period.  Given this uncertainty, we will work from our worst case scenario i.e. a scenario that we already use for non EU resident clients that we work with anyway e.g. in North and South America, the Middle East, the Far East, Australia and New Zealand.

We are not authorised 'over there' but your local adviser is not authorised in the UK …

1. We as your UK adviser, will only be authorised to offer advice on your UK products to non UK residents (post Brexit).
2. Your local adviser in the country that you live will likely not be authorised to offer advice on your UK products.  They will be authorised to offer advice on products in their country only or if the EU with full passport rights, advice on EU wide products (excluding UK) post Brexit.
3. Most regulators around the World already allow for UK advisers to work with you on your UK products only.

Our approach if the UK leaves EU with no deal or transition period (already in operation for non-EU countries today):

1. We offer expat services on your UK regulated products only.  We will also offer guidance on any offshore products that were arranged through us but both these will need to overseen by a local adviser in the country that you live in.
2. It is a condition of our service that you have an adviser or tax accountant authoised in your country of residence to oversee any actions that you/we take on your UK products.  This is to ensure compliance and disclosure under local laws.
3. We will not arrange or advise on any new products/new money to be invested (unless it is moving existing UK pension or investment funds to alternative UK based arrangements), again this will be the responsibility of your local adviser to oversee and advise you in accordance with local regulatory, tax and investment laws.