Many of you will be familiar with that episode of West Wing where various of the male characters patronise Donna by mansplaining the concept of “throwing it out with the trash” – where governments announce bad news on a Friday afternoon because all of the important weekday reporters will have gone home and not be around to cover it. In this light, what are we to make of a deal that was announced on Christmas Eve afternoon? And are we, as yet, in full possession of the facts surrounding the impact on the Kuenssberg family celebrations? And when did Katya Adler nick Laura’s white coat?
Deal/No Deal – we treat these two impostors just the same
Slightly reassuringly for me – although on the whole disappointing – the prediction of this column that any deal would be of no relevance to our sector has come to pass. Although we should recognise that an amicable conclusion to negotiations is to be welcomed. The political fallout if it had ended badly could have had repercussions for us.
The deal makes no real significant mention of financial services. Key features of what little is said are as follows.
- It does state that both sides see the agreement as a basis on which to build and deliver future improvements. So there may be some hope.
- But there are no market access provisions other than possible equivalence determinations – and the most often typed sentence on this keyboard is “there are no equivalence provisions in IDD”.
- There is a commitment to draw up a Memorandum of Understanding (MOU) on future regulatory co-operation. But, as FCA already has MOUs with EIOPA and the 27 national regulators, it is hard to see what this adds.
- There is a commitment to discuss how each side moves forward on equivalence determinations – not directly relevant to us, of course, but Solvency II equivalence would be useful for our insurer cousins.
In related areas there is some positive news.
- There is provision for the continued flow of personal data between UK and EU for up to six months whilst adequacy decisions are taken. This is useful. But worth noting the Information Commissioner’s statement on this and the suggestion you still explore alternative transfer mechanisms.
- You will be able to make visa free work trips to EU for up to 90 days in any 180 day period. Although you are advised to check with your mobile phone provider before travelling as there is no commitment on zero roaming charges.
- There will be no discrimination against the use of electronic signatures.
- Similarly there is a commitment to continuing to view digital contracts as legitimate.
But there has been no real agreement on professional qualification equivalence apart from a suggestion that this should be negotiated on a “profession by profession” basis.
So this leaves us in the following position.
- Passporting rights cease at 11pm on Thursday 31st December.
- After this point DO NOT provide insurance distribution services on any contract where both the policyholder and the risk are located in EU UNLESS you are doing so on behalf of a legal entity that is authorised in EU.
- The only exception to this might be to run off existing contracts. As set out in Chronicle 85 (Jo has renumbered them so they are actually sequential), there is no EU wide provision to allow you to run off existing contracts and the national law is patchy at best. But unofficial conversations I have had with regulators suggest they would expect you to err on the side of doing the right thing by your client so they may view some activity sympathetically. But I should emphasise this is a very unofficial position and should not be relied on. Do get in contact if you would like to discuss this area in more detail.
- Where you have set up a reverse branch, use it.
Hope this is useful. We will continue to monitor developments and keep you informed.