The United Kingdom has expressed its intention to leave the EU and become a third country on March 30, 2019. This decision will have repercussions for citizens, businesses, and institutions in both the United Kingdom and the EU. The UK’s departure could also impact financial markets, given that London is one of the world’s major financial centers.
This section aims to provide information so that consumers of financial products and financial institutions understand how the United Kingdom’s departure from the EU may affect them. It also provides access to information on the contingency measures being adopted at both national and European levels in the area of financial services. Consumers, economic operators, and national and EU authorities must prepare for two main scenarios that may arise from the negotiations between the United Kingdom and the EU regarding the withdrawal agreement and the future relationship between the parties.
These are two possible scenarios:
- If the withdrawal agreement is ratified before March 30, 2019, EU law will cease to apply in the United Kingdom on January 1, 2021, following a transitional period of 21 months.
- If the withdrawal agreement is not ratified in the United Kingdom before March 30, 2019, and the British authorities maintain their intention to leave the EU, the departure will occur without a transitional period and EU law will cease to apply in the United Kingdom from March 30, 2019.
At the national level, to prevent the uncertainty surrounding the United Kingdom’s withdrawal negotiation process and the loss of access to the European market from affecting financial stability or harming clients of financial services, Royal Decree-Law 5/2019 of the Ministry of Economy and Business includes a section with contingency measures related to financial services.
This section complements the measures adopted by the European Commission, which has limited its action to ensuring the critical functions of the European financial system that depend on access to the UK market.
The main measures of the decree-law are:
- Continuity of contracts. A framework is established to ensure the continuity of financial services contracts provided in Spain by financial institutions established in the United Kingdom or Gibraltar, entered into prior to the United Kingdom’s withdrawal but with maturity dates after the withdrawal.
- Temporary regime. The loss of the EU passport means that financial institutions established in the United Kingdom or Gibraltar will have to adapt to third-country regimes to continue providing services in Spain, including those services resulting from contracts already in force (for example, renewal or modification). However, a temporary regime is established—for a period of 9 months—to ensure that adaptation to third-country regimes does not cause disruption in the provision of services associated with such contracts or, alternatively, to facilitate the relocation or termination of contracts if the institution does not wish to continue its activity in Spain. The temporary regime is enabled for activities subject to authorization. Activities related to contract management that do not require authorization may continue to be carried out without the need to use the temporary regime.
- User interests. The financial authorities—Banco de España, the National Securities Market Commission, and the Directorate General of Insurance and Pension Funds—may adopt, within their respective areas, any measures deemed appropriate to ensure legal certainty and to safeguard the interests of users of financial services who may be affected by the United Kingdom’s departure from the EU.
The full text of the decree-law can be consulted here
Below, we provide some of the pages set up by Spanish and European institutions, as well as some private entities in relation to Brexit.
Ministry of Economy and Business
Bank of Spain
CNMV
European Commission
European Parliament
European Banking Federation (EBF)
