It’s time to get your financial affairs in shape for Brexit
THE deadline for the UK leaving the European Union has been debated so much and extended so often that people may naturally be tempted to conclude that Brexit won’t happen this time either. But with the spectre of a ‘no-deal’ Brexit on October 31 now looming larger than ever, consumers should be taking steps to protect themselves from a financial scare on Halloween.
In line with our mission to serve the public interest, the Central Bank has already done a lot of the legwork to ensure that the financial system as a whole can withstand the considerable economic shock of a no-deal Brexit – as the resilience of firms and the wider system provides the fundamental protection for consumers and investors.
We have also pushed firms to take the necessary action to ensure they protect consumers from the impact of a no-deal Brexit.
We have repeatedly reminded banks, insurance companies and other financial firms that they are responsible for putting plans in place to ensure they are Brexit-ready.
And we have told the firms in no uncertain terms to contact affected customers, to advise them what they need to do.
In most cases, firms have taken the necessary steps and consumers may have heard from them already.
However, there will inevitably be some negative impact on consumers where firms have not put suitable plans in place, failed to secure the necessary authorisations to continue to conduct business in Ireland, or chosen no longer to provide financial services here.
One of the benefits of membership of the European Union is that firms in member states, such as the United Kingdom, can ‘passport’ – or sell their products and services – in to other member states, such as Ireland, without having to seek an authorisation from the Central Bank of Ireland.
But the UK will lose that privilege if it leaves the EU without a deal.
As a rule of thumb, financial services providers who are currently authorised in the UK need to take steps to ensure that they can continue to operate here after Brexit.
If your UK service provider is affected, you should have heard from them by now about what they are doing to ensure they can continue to provide the service in Ireland after October 31 and, if not, what plans they have in place for customers.
If you have received such a letter or other communication, I would urge you to take the time to read it and consider its contents.
If you have not heard from your service provider and are concerned, you should contact them and find out if you will still be able to use their product or services after October 31 and, if not, what plans they have in place for their customers.
It is important to stress that some products and services are easier to replace than others, due to, for example, the range of providers in the market.
So while it would be inconvenient if, say, a foreign exchange provider no longer wished to – or was no longer authorised to – provide services in Ireland, consumers would generally have the option to switch to other providers in such cases.
In the case of insurance policies written prior to Brexit, things are more complicated. The Central Bank was concerned that if insurance firms failed to put the necessary plans in place, they might not be able to service the policies of Irish customers post-Brexit, such as paying claims associated with those written prior to Brexit.
That is why, on top of driving firms to put plans in place, we also worked with the Department of Finance on legislation to protect customers of insurance products in the event of a no-deal Brexit.
The legislation allows certain UK/Gibraltar insurers and brokers to continue to service existing insurance contracts with Irish policyholders for a limited time in the event of no-deal. Your insurer should be able to provide details.
I should stress that it is a criminal offence for a firm to sell financial products or services without the necessary authorisation. We will take the appropriate action against such firms if they continue to conduct business in Ireland.
We take a tough line on unauthorised providers because consumers who deal with a firm that has failed to secure the required authorisation may not be able to avail of valuable statutory protections. These may include the Irish deposit protection, insurance compensation and investor compensation schemes, and access to the Financial Services and Pensions Ombudsman.
With all the talk about Brexit over the past few years, there is a danger of fatigue setting in.
But with a no-deal Brexit potentially just weeks away, now is the time to find out how it might affect the financial products and services you and your family use.
If you haven’t heard from your provider, contact them now to ask them what plans they have in place for you, and what they are doing to plan for a no-deal scenario.
In summary, here are a few Brexit do’s and don’ts for consumers of financial services:
– Do read any communication from your financial services provider; – Do contact your provider if you haven’t heard from them;
– Don’t deal with an unauthorised provider;
– Do check out our website for further information, at Brexit FAQ – Consumers.
If you’ve not heard from your insurer, contact them now