Italy: A partial relief on Brexit transition period has been granted to UK banks, electronic money institutions operating through a branch and investment firms (the UK Regulated Entities) that submitted the authorization application to the relevant competent authority before 31 December 2020. Conversely, UK payment institutions, electronic money institutions operating under the freedom of services regime and asset management companies are excluded from the temporary transitional measures and thus will not be able to continue operating in Italy.
In general, under new temporary measures (art. 22 of Law Decree No. 183 of 31 December 2020):
- UK Regulated Entities may carry on the activities performed before the end of the transitional period (falling on 31 December 2020) until authorisation is either granted or refused, and in any case no later than 30 June 2021 (the Extended Period).
- During the Extended Period, the operation of the UK Regulated Entities is limited to the activities for which authorisation is sought and to the outstanding contractual relationships.
- Despite the Extended Period, opening new contractual relationships or modifying existing ones is not allowed whereas performing activities in connection with the management of so-called “life cycle event” for derivatives contracts not subject to clearing by a central counterparty is permissible.
- UK Regulated Entities shall give their clients adequate information about the consequences of the Brexit on the outstanding contractual relationships.
- UK insurance undertakings are deleted – as of 1 January 2021 – from the list of EU insurers that can carry out business in Italy and shall not assume new contracts or renew existing ones, but are allowed to continue their activity limited to management of pending contracts and insurance covers. In addition, UK insurance undertakings shall, among others, submit to IVASS (a) within 90 days from the end of the transitional period (thus within 31 March 2021), a plan containing the measures that allow for the correct execution of the contracts in force at that date, including information on claims payments and (b) on an annual basis, a report on the state of implementation of the plan. Policyholders of contracts with a term longer than one year may withdraw at any time.
Special provisions apply to certain entities during the Extended Period, among others, entailing that:
- UK banks and investment firms carrying out investment services and activities in Italy under the freedom of services regime are not allowed to provide their services to retail clients and to professional clients upon request, as both defined under relevant Italian legislation.
- UK investment firms, banks and UK electronic money institutions operating through the establishment of branches shall keep their adherence to the Italian alternative dispute resolution system (Arbitro per le Controversie Finanziarie and Arbitro per le Controversie Bancarie, respectively) and are due to adhere to the Italian compensation system (Fondo Nazionale di Garanzia and Sistema di garanzia dei depositi italiani, respectively).
- UK Regulated Entities that are allowed to continue their operation during the Extended Period are subject to the Italian regulatory regime applicable to non-EU firms and to the supervision of the relevant competent Italian authorities.
Should the authorization be denied, the UK Regulated Entities shall cease their activities no later than three months after the communication of refusal without causing any prejudice to their clients.
The UK Regulated Entities that are compelled to cease their operation in Italy, also due to a refusal of authorization, shall refund the clients with money, financial instruments and other assets, according to the instructions received by them.