Published: 30 September 2019
The possibility of the UK heading for a ‘no-deal’ exit from the EU has intensified the spotlight on the financial services industry’s state of readiness in recent weeks.
No-deal remains only one possible outcome for Brexit, and one which the UK parliament has made clear it wants the government to avoid. But what if we do end up there?
Andrew Bailey, Chief Executive of the Financial Conduct Authority (FCA), has warned that, while it had worked with the Bank of England to prepare for all possible scenarios, it couldn’t guarantee there would be no disruption in the financial services world.1
The problem is that while leaving with some form of trade agreement would trigger the start of a transition period, exiting without one would spell the immediate end of all existing EU and UK arrangements. The UK would instead revert to World Trade Organisation rules when dealing with the 27 remaining EU nations.
The implications for financial services could be very wide-ranging. For example, the government’s so-called ‘Operation Yellowhammer’ documents, released in early September, point to the likelihood of disruption to cross-border UK financial services, to the flow of personal data to and from the EU and delays to certain insurance payments from UK insurers into the EU.2
The exact ramifications would only become clear at the time. But in the meantime, you can find the latest government information about what to expect around a deal or no-deal Brexit at gov.uk and here’s our quick guide to some of the financial services areas to watch and how they could impact you."
These are just some of the current talking points around financial services in the event of a no-deal Brexit. If you want to research further and keep an eye on official information covering a deal or no-deal scenario, you may find it helpful to visit gov.uk and take the government’s ‘get ready for Brexit’ check at gov.uk/get-ready-for-brexit.
This is provided for general information only and takes no account of personal circumstances. It is not a recommendation to buy or sell. It is provided solely to support you in making your own investment decisions. If you have any doubts as to their suitability you should seek expert advice. Alliance Trust Savings does not give financial or investment advice.
Please be aware that the value of investments can fall as well as rise so you could get back less than you invest.
Laws and tax rules may change in the future without notice. This information takes no account of your personal circumstances which may have an impact on tax treatment.
1 City AM - Issues with no-deal Brexit preparations ‘still to be resolved’, warns City watchdog - 16 September 2019
2 FT - Yellowhammer document sets out potential damage of no-deal Brexit - 11 September 2019
3 DLA Piper - UK: No-Deal Brexit: Impact On Financial Markets - 13 Sept 2019
4 BBA - What is ‘passporting’ and why does it matter? - December 2016
5 Guardian - British expats face 'cliff edge' in pensions and insurance after Brexit - 18 September 2017
6 Insurance business UK - FCA’s Andrew Bailey on ‘the risk that remains’ for insurance policyholders - 17 September 2019
7 FT - Expats warned of ‘frozen’ pensions under no-deal Brexit - 1 Sept 2019
8 HOC - Exiting the European Union Committee Oral evidence: The progress of the UK's negotiations on EU withdrawal, HC 372 - 24 July 2018 - Q2317
9 ABI - Travelling to the EU in the case of a No-Deal Brexit - n/a
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