On 8 October 2019, the European Banking Authority (EBA) published a communication on the remaining issues related to the preparation by financial institutions for the withdrawal of the UK from the EU. In this communication, the EBA warns firms and national competent authorities against complacency and urges them to continue progress on contingency planning. In particular, the communication focuses on the operationalisation of relocation plans and customer communication.
As regards the operationalisation of relocation plans, the EBA reminds credit institutions of its detailed set of principles published in October 2017 centred around governance to avoid the risk of ‘empty shell’ companies. The EBA highlights its concerns that there is uncertainty towards the transfer of assets, skilled staff and risk functions associated with newly authorised businesses. Firms need to ensure that they have the capability to manage the risks they generate from the first day after the withdrawal from the EU. Additionally, the EBA highlights the rules concerning the handling of clients’ personal data under the General Data Protection Regulation, as the UK will become a third country in a no-deal scenario. Firms are asked to consider whether they have taken appropriate mitigating actions such as using appropriate safeguards, for instance implementing standard data protection clauses or exploring whether derogations would apply.
As regards customer communications, the EBA reminds institutions to ensure that they have taken the EBA opinions and December 2018 communication into consideration, and can satisfy themselves that they have engaged with all relevant customers and have provided clear and adequate information on the risks and mitigating measures being taken.
In terms of next steps, the EBA states that it will continue to monitor the final stages of contingency planning and customer communication by financial institutions and how they and their customers may be affected by a no-deal Brexit.