Europe

EIOPA Publishes Recommendations for Insurers in Event of No-Deal Brexit

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On February 19, EIOPA published recommendations (EIOPA-BoS-19/040) on providing guidance on the treatment of UK insurance undertakings and distributors with regard to cross-border services in the EU in the event of the UK leaving the EU without a deal.

The recommendations are addressed to NCAs and their general objective is to minimise the detriment to policyholders with cross-border insurance contracts. They are issued in accordance with Article 16 of the EIOPA Regulation (1094/2010), and are based on the Solvency II Directive (2009/138/EC), the Insurance Distribution Directive ((EU) 2016/97) (“IDD“), EIOPA guidelines and other relevant EIOPA instruments.

The recommendations relate to matters including the following:

  • Authorization of third-country branches. In accordance with Article 162 of Solvency II, UK insurance undertakings may seek authorization to carry out cross-border business through a branch in a member state.
  • Orderly run-off. NCAs should prevent that UK undertakings conclude new insurance contracts or establish, renew, extend, increase or resume insurance cover under the existing insurance contracts in their jurisdiction if they are not authorized for such insurance activities under EU law. This is without prejudice to policyholder rights to exercise an option or right in an existing insurance contract to realize their pension benefits.
  • Change in the habitual residence or establishment of the policyholder. If a policyholder with habitual residence or, in the case of a legal person, place of establishment in the UK, concluded a life insurance contract with a UK insurance undertaking and afterwards the policyholder changed its habitual residence of place of establishment to a EU27 member state, NCAs should consider in the supervisory review that the insurance contract was concluded in the UK.
  • Distribution activities. NCAs should ensure that UK intermediaries and entities that intend to continue or commence distribution activities to EU27 policyholders and for EU27 risks after the UK’s withdrawal, are established and registered in the EU27 in line with the relevant provisions of the IDD.
  • Portfolio transfer. If it was initiated before the withdrawal date, the NCAs should allow the finalization of portfolio transfer from UK insurance undertakings to EU27 insurance undertakings.

Competent authorities must inform EIOPA whether they comply or intend to comply with the recommendations within two months of the translated versions being issued. They will apply as of the date the UK leaves the EU.

ESMA Publishes 2019 Work Program for Credit Rating Agencies, Trade Repositories and Third-Country CCPs and CSDs

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On February 19, EMSA published its 2018 annual report and 2019 work program relating to its supervision of credit rating agencies (“CRAs“), trade repositories (“TRs“) and its monitoring of third-country central clearing counterparties (“TC-CCPs“) and central securities depositories (“TC-CSDs“) (ESMA80-199-273). READ MORE →

EIOPA Publishes Framework for Identifying Conduct Risks

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On February 20, the European Insurance and Occupational Pensions Authority (“EIOPA“) published a framework for assessing conduct risk through the lifecycle of an insurance product.

The purpose of the framework is to identify the drivers of conduct risk and the way in which these are detrimental to consumers. The aim is to help identify the issues faced by consumers and provide input on the types of risks EIOPA and national competent authorities (“NCAs“) should focus on. READ MORE →

European Commission Adopts New Delegated Regulation Identifying High-Risk Third Countries under MLD4

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On February 13, the European Commission adopted a Delegated Regulation (C(2019) 1326 final) which supplements the Fourth Money Laundering Directive ((EU) 2015/849) (“MLD4“) by identifying 23 high-risk third countries with strategic deficiencies. The Delegated Regulation will repeal Delegated Regulation (EU) 2016/1675 which currently lists 16 countries as high-risk. READ MORE →

Council of EU Agrees Position on Proposed PEPP Regulation

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On February 13, the Council of the EU published a press release which announced that its Permanent Representative Committee (COREPER) had agreed its position relating to the proposed Regulation on a pan-European personal pension product (“PEPP“). The text, now agreed between the European Commission, the European Parliament and the Council, will undergo legal and linguistic review, before the Parliament and Council will be called to adopt the final text.

In a press release, the Commission welcomed the agreement.

FSB Report Assesses Fintech Developments and Potential Financial Stability Implications

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On February 14, the Financial Stability Board (“FSB“) published a report assessing Fintech market developments in the financial system and the potential implications for financial stability.

Three Fintech developments were considered: new providers of bank-like services competing or co-operating with established financial services providers; the provision of financial services by large technology companies (BigTech); and reliance on third-party providers for cloud services. These are considered to be developments that are altering, or have the potential to alter, the current structure of the financial system and as a result may have financial implications for financial stability. READ MORE →

European Parliament Adopts Proposed Regulation Amending Regulation on Cross-Border Payments

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On February 14, the European Parliament published a press release announcing it had adopted in plenary at first reading the proposed Regulation amending the Regulation on cross-border payments (924/2009) regarding certain charges on cross-border payments in the EU and currency conversion charges (20189/0076/(COD)). On the same day the provisional edition ((P8_TA-PROV(2019)0124) of the text of the legislative resolution was also published.

The next step is for the proposed Regulation to be adopted by the Council, after which it will enter force 20 days after its publication in the Official Journal (“OJ“) and the majority of provisions will apply from December 15.

An FAQs and factsheet have also been published in relation to the proposed Regulation.