UK: Business Brexit Preparations Cannot Wait for Final Deal (Pinsent Masons Insurance Briefing: 5 September 2018)

Last Updated: 5 September 2018
Article by Colin Read, Nicholas Bradley and Alexis Roberts

Insurance briefing is a round-up of legal and business developments published on Out-Law.com.

The main topics we're focusing on this week are:

Business Brexit preparations cannot wait for final deal

Businesses cannot wait for clarity over the terms of the UK's final deal with the EU before taking steps to prepare for Brexit, an expert has warned. Clare Francis of Pinsent Masons, was commenting on reports that a full session of the European parliament will not vote on whether to approve the final exit agreement until a session on 11-14 March 2019, just two weeks before the UK is due to leave the EU. "Businesses intent on waiting for clarity on the detail of the Brexit deal before taking steps to prepare for Brexit need to consider whether the negotiating timetable permits this strategy. We are encouraging all businesses that haven't already done so to draw up plans for a range of plausible Brexit outcomes immediately so that they can take steps to manage risk. Businesses that don't take these steps risk quickly being overtaken by events and losing their competitive advantage," she said.

UK government details implications of 'no deal' Brexit

The UK government has started to outline the impact that a 'no deal' Brexit could have on businesses and consumers. It has published 25 technical notices spanning a broad range of issues and sectors, including financial services, the regulation of medicines and medical devices, importing and exporting, farming and VAT, that highlight the practical effects that could result from the UK exiting the EU on 29 March 2019 without having reached an agreement on the terms of its withdrawal with the remaining 27 EU member states. Further 'no deal' technical notices are expected to be issued over the coming weeks. Guy Lougher, an EU and Brexit specialist at Pinsent Masons, said: "The government's publication of the 25 notices is a wake-up call for those businesses that have not yet done any structured scenario planning in order to understand the potential implications for them of a 'no deal' outcome. It is clear that in many respects a no deal outcome will likely have significant consequences, and necessitate trading differently. For example, the notice on 'trading with the EU if there's no Brexit deal' outlines some of the practical ways in which businesses will need to trade differently with the EU post-Brexit. Businesses need to engage now with the subject matter of the notices, and organise scenario planning sessions if they have not already done so, given the risk and implications of a no deal outcome," he said.

Insurance brokers call for post-Brexit equivalence regime

UK insurance brokers are questioning the application of 'enhanced equivalence' proposals in the UK government's Brexit documents for financial services and are seeking the introduction of a new 'equivalence' regime, similar to that available to investment managers, to allow them continued access to the EU market after Brexit. According to the London and International Insurance Brokers' Association (LIIBA) in a letter to the prime minister, the proposals for an 'enhanced equivalence' regime for UK financial firms, based on that already available to non-EU countries, will not work for intermediaries. As there is no such equivalence framework in either the EU's Insurance Mediation Directive or its replacement, the Insurance Distribution Directive (IDD), which comes into force on 1 October 2018, there is no existing regime to be enhanced.

GDPR prompts UK data protection complaints to double

The number of data protection complaints received by the UK's data protection watchdog has doubled since the General Data Protection Regulation (GDPR) took effect. The Information Commissioner's Office (ICO) said that it received 4,214 data protection complaints in July, up from 3,098 in June, 2,310 in May and 2,165 in April, according to media reports. The GDPR took effect on 25 May this year. The ICO has also seen an increase in the number of personal data breaches reported to it since the new EU data protection laws began to apply. A spokesperson for the ICO said: "It is early days and we will collate, analyse and publish official statistics in due course. But generally, as anticipated, we have seen a rise in personal data breach reports from organisations. Complaints relating to data protection issues are also up and, as more people become aware of their individual rights, we are expecting the number of complaints to the ICO to increase too."

FCA focused on anti money laundering in fight against financial crime

ANALYSIS: Recent sanctions imposed by the Financial Conduct Authority (FCA) on Canara Bank show the regulator's increasing focus on anti money laundering (AML) systems and controls.
The UK branch of the Indian bank was fined £896,100 by the FCA in June 2018 for breaching Principle 3 (taking reasonable steps to organise its affairs responsibly and effectively, with adequate risk management systems) of the FCA's Principles for Businesses. It was also banned from accepting deposits from new customers for 147 days. The bank failed to maintain adequate AML systems and failed to take sufficient steps to remedy weaknesses in its AML systems and controls once notified by the FCA. The Canara Bank sanctions are the latest in a series of AML system findings and penalties imposed by the FCA on financial services firms over the last five years. They follow findings against Deutsche Bank (fined over £163 million in 2017); Sonali Bank (fined over £3.25m and banned from acquiring new customers for 168 days in 2016); Bank of Beirut (fined £2.1m and banned from acquiring new customers from high-risk jurisdictions for 126 days in 2015); and Standard Bank UK (fined over £7.64m in 2014). The FCA has been focusing on combatting money laundering, and specifically on ensuring that firms have adequate AML controls and systems in place which are implemented. In its 2017-18 business plan, the regulator said that it would generally use its civil powers in these cases, but may use its criminal powers to prosecute firms or individuals "if failings are particularly serious or repeated".

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