‘Millions of people across Europe at financial risk from Brexit contract issue’

Thirty-six million insurance policyholders across the UK and EEA, and £26 trillion of outstanding uncleared derivatives contracts could be impacted if the UK and EU fail to agree on a solution.

Firms are urgently taking steps to mitigate the impact on customers and clients. However, without regulatory support across Europe it is highly unlikely that this will be adequate to fully address the problem in the time that remains.

A paper published today by TheCityUK – ‘Continuity of cross-border financial contracts post-Brexit’ – makes clear that the only workable solution to this problem is a coordinated UK/EU response involving both the public and the private sectors.

TheCityUK argues that the full range of affected cross-border contracts must be grandfathered, either for a time-limited period, or potentially until maturity. This would protect UK and EEA policyholders and institutions and avert potential widespread financial losses.

Miles Celic, chief executive Officer, TheCityUK, said: “This sounds like an obscure issue, but ignoring the question of contract continuity post-Brexit is to play a dangerous game of chicken with the finances of customers across the whole of Europe. Without a viable solution, millions of people could be left without a safety net. This must not be sucked into the Brexit negotiations. It is a non-political, technical issue and needs a non-political, technical solution.

“Continuing to be able to serve customers and clients is the industry’s number one priority. While firms are doing everything they can, this is not a problem that businesses can fix aloneand requires a coordinated UK/EU approach. Without it, people and businesses across Europe could be left dangling over a cliff edge following Brexit.”