Dealing With UK Clients Post Brexit

Wed Jan 13 2021

As a result of the UK leaving the EU, passporting no longer applies. Brokers Ireland has emailed members on numerous occasions over the past two years to highlight the consequences of Brexit, including in respect of the Temporary Permission Regime (TPR) and the defaulting Financial Services Contracts Regime (FSCR) where the TPR was not being availed of.

Any Broker who had previously advised the Central Bank of their intention to provide their services to UK clients (passporting), had the opportunity to avail of the TPR with the UK supervisory authority, the FCA, and the closing date to register for that was 30 December.  Therefore, those Brokers could continue to service these clients during the application process with the FCA, and not have to wait for their application to be completed before providing their services.

Some Brokers decided the cost of being registered with the FCA (levies etc) was not going to be operationally beneficial and decided against following that route.   These Brokers will automatically be subject to the FSCR which was introduced by the UK Government to ensure existing contractual obligations not covered by the TPR can continue to be met. The FSCR will permit policies written for UK clients entered into pre-30 December to continue to be serviced, so that they can be wound down / run–off in an orderly fashion.  No new business or renewals can be written under the FSCR.  The FSCR will apply for a maximum period of 15 years for insurance contracts.

Where Brokers did not advise the Central Bank of their intention to sell insurance to UK clients[1]  (passporting) they will not be subject to the TPR or SFCR regimes as they will not appear on the FCA’s passporting list.  Their UK clients are therefore not protected by these regimes, and potentially their policies could be invalid, and brokers with these clients should advise them accordingly and as soon as possible.

The FCA TPR and FSCR are in place to protect UK residents, regardless of where the insurance provider is located, whether Ireland or other EU member state, or where the risk is located.  It’s the protection of the UK residents that is the purpose of the regime.  While the UK was a member of the EU these clients were protected by EU legislation.  Now that the UK has left the EU, they must be protected by UK legislation.  If they fall outside of this protection, their policies could be deemed invalid.

This is an unfortunate consequence of the UK leaving the EU.

[1] We are not referring to risks in the UK which are part of, or related to, Irish client portfolio, where the insurance decisions are made by the client in Ireland in respect of those risks.

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