UK Finance and the Association for Financial Markets in Europe (AFME) have co-published a paper that examines the impact of Brexit on cross-border financial services contracts.
When discussing how to address contractual uncertainty, the paper states, among other things, the following:
“An EU-wide solution would be preferable to minimise uncertainty for businesses across the EU. This could comprise legally binding grandfathering in the withdrawal agreement or European legislation, potentially supported by a coordinated regulatory approach to provide for continuity of existing contracts or ‘no-action’ relief. Individual EU Member States may also consider grandfathering existing contracts under their national licensing regimes where judged appropriate.
The UK should also provide clarity that existing contracts from EU-based banks to UK customers will be grandfathered, for example through the European Union (Withdrawal) Bill.”
The paper also mentions that a range of actions would help manage the impact from undermining existing contracts or requiring contracting parties to engage in restructuring:
- both the EU and the UK should confirm at the earliest opportunity the principle established in the EU negotiating directives that the right to trade goods legally placed on the market at the point of separation must be preserved and should be extended to services;
- transitional arrangements should be structured in such a way as to protect existing contracts for the duration of the transitional arrangements;
- a long-term partnership agreement should provide a similar bridge into the new arrangement for contracted services by providing for the continuity of existing contracts;
- EU member states should consider legislation to ensure contractual continuity for a specified number of years where appropriate or required; and
- the UK should use the European Union (Withdrawal) Bill process to provide the same.
View UK Finance and AFME paper on need for post-Brexit contractual certainty on cross-border financial services contracts, 8 September 2017