Providing financial services from the UK post-Brexit
The end of the Brexit transition period has had a huge impact on UK companies providing any kind of financial services. From 1 January 2021, it is no longer possible to enjoy the benefits of the freedom of establishment and freedom to provide services.
For many UK financial services institutions, the UK's withdrawal from the EU means changing the way they have been providing their services in EU member states. Starting this year, if they do not obtain a licence for their branch or a newly established company in the relevant EU member state, they can no longer rely on the so-called single European passport and provide services based on the freedom of establishment or freedom to provide services.
Importantly, Brexit will not only affect those financial services providers that obtained their licences in the UK – a number of them obtained their licenses in another EU member state and then established a branch in the UK through which they have been providing financial services in other EU member states. Such arrangements now also need to be changed – the single European passport does not apply to British branches in these cases either.
Nonetheless, the end of the transition period does not necessarily mean the end of all British institutions’ activities in EU member states. Yet, to continue providing financial services, they must obtain a licence in one EU member state. This, of course, involves a number of related issues: sufficient staffing, correct risk management system, and the (re)negotiation of contracts with existing clients residing or established in the EU.
Brexit will also affect consumers: for example, funds deposited in accounts with British banks will not be covered by the EU rules on deposit insurance; insurance contracts concluded with British insurance companies providing cross-border insurance in the Czech Republic cannot be amended.
The above is just an outline of the changes that financial institutions and consumers face as a result of the end of the single European passport. We will be happy to assist you in analysing Brexit’s impacts and coming up with solutions dealing with its consequences, including their subsequent implementation.