The UK retail investments sector comprises many relatively small UK firms servicing primarily UK-based customers. For firms that have EEA-based customers (including UK expats), you should make sure you have taken the steps you need to, to ensure that you are able to continue servicing them after the end of the transition period.
Servicing your EEA customers after the transition period
If you have customers in the EEA, you need to decide on your approach to servicing your existing contracts with them. You should take the steps available to you to continue to service customers in accordance with local law and national regulators’ expectations.
We are clear that firms’ decisions need to be guided by what is the right outcome for their customers. In many cases, it could be a poor outcome for the consumer for you to suddenly stop servicing them.
As part of your preparations for the end of the transition period, you should be clear whether the services you provide to EEA-based customers are regulated by EU law (eg MiFID II, the Insurance Distribution Directive (IDD) or Solvency II) and local law, and how your ability to service those customers might change after the transition period. For example, if you intend to rely on reverse solicitation to service existing EEA-based customers without local authorisation (eg under a Member State’s implementation of Article 42 of MiFID), we strongly encourage you to seek legal advice on your plans and understand the national law in each Member State in which you conduct business, to ensure this is permitted in the relevant country and how this impacts your planning. You should also bear in mind that national regimes may change over time and this could affect your business model in the future.
If you have decided to stop servicing customers in the EEA after the transition period, we expect you to treat your customers fairly when winding down or transferring business. This includes communicating your decision to customers early, considering what would be a fair timeframe for winding down or transferring business and supporting customers while they are in the process of finding alternative providers.
EEA bank account closures
The ability of UK banks to continue providing services to customers – particularly retail customers – resident in the EU will be determined by national regimes.
If you have customers in the EU who are reliant on UK bank accounts that may be closed, you will need to review your capability to make and receive payments to and from an overseas account. You will need to identify impacted customers and work with them to implement alternative arrangements if necessary so that they can continue to benefit from their investment product.
We expect you to communicate with your customers in a timely and supportive manner.