On August 23, the UK government published guidance in the form of a technical notice on the effect on banking, insurance and other financial services should the UK leave the EU without agreement (No-Deal Brexit).

The guidance is one of a series of technical notices that aim to provide information to UK businesses and citizens on how to prepare for a No-Deal Brexit. This describes the situation in which the UK and the EU fail to conclude a draft withdrawal agreement by the time of the UK’s exit from the EU in March 2019, and would mean that there would be no implementation period, currently intended to run from March 2019 to December 2020 (for further information on the UK government’s intentions, please see the July 13 edition of the Corporate & Financial Weekly Digest

The technical notice emphasizes that the UK government will take unilateral action, where necessary, to ensure as much continuity as possible for firms located both in the UK and the European Economic Area (EEA). The technical notices refer to one such unilateral measure, the temporary permissions regime and temporary recognition regimes (for further information, please see the July 27 edition of the Corporate & Financial Weekly Digest), which will enable EEA firms that currently passport into the United Kingdom to continue to provide those services to UK customers for up to three years after the UK’s exit.

The technical notice states that, at this stage, firms should continue to plan on the basis that an implementation period will be in place between March 2019 and December 2020. It goes on to state that “provision will be made” for any firm that does not wish to continue carrying out regulated activities in the United Kingdom, or is unsuccessful in applying for authorization, to discontinue their UK regulated activities in an orderly manner.

The technical notice discusses the impact of a No-Deal Brexit on a variety of stakeholders, including:

  • Individual and business customers, including UK customers dealing with UK- and EEA-based firms, as well as EEA customers dealing with UK-based firms;
  • Financial services firms and fund managers, including those who currently rely on portfolio delegation; and
  • Financial market infrastructure, including central counterparties, central securities depositories, payment and settlement systems, trading venues, credit rating agencies and trade repositories.

The technical notice is available here.