|
|
The Bank of England’s Financial Policy Committee (FPC) is looking into the possible risks of disruption to financial services caused by a hard Brexit, which could have most impact on the UK’s financial stability.
The risks arising from discontinuity of cross-border contracts, in particular insurance and derivatives; restrictions on sharing of personal data between the EU and UK; and restrictions after Brexit on cross-border banking, central clearing and asset management service provision, all pose risks the FPC believes.
In a committee report, the FPC finds “operational impediments to firms’ plans to mitigate risks to the continuity of insurance contracts”. Loss of authorisation could affect firms’ ability to continue to collect premiums and pay out on claims on outstanding insurance contracts, which in some cases extend for several years, it states.
Firms also lack robust contingency plans to mitigate risks to financial service provision from possible barriers to the flow of personal data between the UK and EU27. Many firms currently rely on data centres located in the UK to provide financial services across Europe.
Full article on Commercial Risk (subscription required)