Following last week’s agreement between the UK and the EU to extend Article 50 until 31 October 2019, the FCA has confirmed that it will also extend the deadline for incoming EEA firms to enter the UK Temporary Permissions Regime (“TPR“) to 30 May 2019. The FCA’s announcement only applies to firms for which the FCA is the “relevant regulator”, which includes insurance intermediaries.
If the Withdrawal Agreement can be ratified by 30 May 2019, the TPR will not come into force. This is because an implementation period would allow incoming EEA firms to continue their activities in (or into) the UK until the end of December 2020.
If no agreement is reached by the UK and the EU before the end of May, it is not clear whether the FCA will extend the window for notification to align with the Article 50 deadline of 31 October 2019. The FCA has stated that it will continue to keep the TPR notification window under review, but it is unlikely that further detail will be provided until there is greater political clarity on if, when and how the UK will leave the EU.
In light of this uncertainty, any incoming EEA intermediaries who intend to rely on the TPR should proceed on the assumption that they will need to submit their notifications by the end of 30 May 2019.
The position for insurers is different. The PRA has confirmed that “[the] deadline for a firm to notify the PRA that it wishes to enter the TPR has passed” and that it “does not intend to further extend the notification period”.
The period for notifications set out in the PRA’s Direction: ‘Temporary permission and variation: notification before exit day’ 7 November 2018 as amended by the PRA Direction – ‘Temporary permission and variation: notification before exit day (amendment) 28 March 2019) ended on 11 April 2019. The validity of notifications made by insurers before the deadline is not affected.
Recommendations issued on Tuesday by EIOPA emphasise the importance of safeguarding policyholders in the event of a “no deal” Brexit. Encouragement given to EEA states to help UK insurers meet their obligations to EEA policyholders is particularly welcome.
In some areas, EIOPA has provided explicit guidance on the approach it expects individual states to take. For example, it is clear (and unsurprising) that UK insurers should not be allowed to write new contracts in the EEA without authorisation. In other areas, EIOPA has taken a “softer” approach. Examples include that regulators:
- should apply “a legal framework or mechanism to facilitate the orderly run-off” of business which becomes unauthorised as a consequence of Brexit; and
- should not prejudice policyholders who have “an option or right in an existing insurance contract to realise their pension benefits“.
Overall, EIOPA’s announcement attempts to strike an appropriate balance, reflecting the considerable lobbying efforts by UK and EU27 trade bodies. Its acknowledgement of individual state discretion in a number of key areas does, however, still leave uncertainty for UK firms planning for 29 March 2019. There is also nothing in EIOPA’s recommendations that could not have been said many months (or even years) ago. It is a pity that politics have prevented earlier publication of these recommendations, leaving industry to spend many millions on unnecessary legal advice and other contingency planning.
EIOPA has given national regulators 2 months to say if they comply with each recommendation, or explain non-compliance.
In a long-awaited step forward for the Myanmar insurance sector, on 2 January 2019, the Ministry of Planning and Finance (MPF) officially announced its plans to open up the life and non-life insurance sectors to foreign insurers. Further details of the liberalisation, including the insurance licence application process and timetable, were subsequently issued by the Financial Regulatory Department (FRD) of the MPF on 18 January 2019.
This represents a major milestone in opening up the insurance sector for Myanmar’s population of approximately 50 million people. To date, the sector has been dominated by the government-owned insurer, Myanma Insurance, with only a handful of foreign insurers being permitted to operate limited non-life insurance business in the Thilawa Special Economic Zone.
Please click here for discussion of the new regime and what it means for foreign insurers operating in Myanmar.
The FCA portal for incoming EEA firms to notify the PRA and the FCA of their intention to enter the UK Temporary Permissions Regime (“TPR”) is now open.
The TPR will apply if the UK leaves the EU on 29 March 2019 without an implementation (transitional) period. It ensures that EEA firms currently operating under an incoming passport (either from a UK branch or on a cross-border services basis into the UK) can continue to carry out regulated activities in the UK until they receive new direct authorisation by the UK regulators.
This short “at a glance” guide contains an overview of how the TPR will apply to EEA (re)insurers and suggests some next steps. Notifications must be submitted before 29 March 2019.