On 19 February 2019, the Bank of Italy published a communication (the “Communication”) addressed to UK-based banks, payment institutions and e-money institutions operating in Italy under a branch or services passport as well as by availing themselves of a network of agents (the “UK Intermediaries”).

The Communication – transmitted individually to UK Intermediaries on 15 January – moves from: (i) the initial indications provided by the European Banking Authority (“EBA”) calling on all financial institutions to duly provide clear information for customers whose contracts or services might be affected by Brexit (See our blog here); and (ii) the subsequent EBA’s call for action to examine the obligations towards present and future customers; take any necessary actions to ensure service continuity; and provide all customers with correct and timely information regarding contracts or services that may be affected by Brexit (See our blog here).

As such, under the Communication, UK Intermediaries are required to:

• send their Italian customers detailed personalized information about the impact of Brexit, and particularly on: (i) the effects on existing contracts, even in cases where termination of activities is expected; (ii) the consequences of any potential corporate restructuring related to Brexit, having particular regard to any planned transfer and/or sale of businesses in whole or in part; (iii) the possibility of making recourse to an alternative dispute resolution mechanism; and (iv) the effects on deposit insurance guarantee schemes coverage, where appropriate (the “Customers’ Information”);

• publish the Customers’ Information on the UK entity’s website;

• adhere to the Banking and Financial Ombudsman, the Italian alternative dispute resolution mechanism (only for Italian branches); and

• promptly inform the Bank of Italy (through dedicated email addresses), should substantial disruptions be expected for contract continuity and/or for customers’ rights.

From a practical perspective, Customers’ Information shall:

• be written in clear and plain language, avoiding any reference which might cause undue alarm;

• be either in the language originally chosen by the customer in the contract or, if this is not possible, in the language in which the contract was drafted.

• provide contact details for further information and assistance, and up-to-date information about the competent complaints office.

In any case, in line with the applicable statutory regime, UK Intermediaries shall meet their contractual obligations in full and comply with the regulatory measures applicable for the provision of services in Italy, including those related to contract termination, switching of payment services, proposals for unilateral contract amendments, and transfer of business.