FCA chief Andrew Bailey has urged policymakers to secure the future of long-term pensions and insurance contracts after Brexit by avoiding the ‘cliff-edge’ removal of passporting rights.
Passporting rights are often needed to pay out on pensions and other contracts for expats or from firms with headquarters overseas. Treasury select committee chair Nicky Morgan and others, including the Association of British Insurers, have noted that transitional arrangements could be insufficient years down the line and that clear rules were needed to maintain continuity.
In an interview with Bloomberg, Bailey says: “It’s eminently solvable but it has to be solved, and if it isn’t solved, it’s a big issue. As I’ve said before it’s a symmetric big issue in that it effects both the UK and the EU. If the passporting both inwards and outwards of the UK falls away without any replacement that’s where the contract continuity issue bites because there are things that are done in terms of servicing, adjusting, maintaining contracts which depend upon having a regulatory permission or authorisation.
“If they are not there you can’t do them. That’s critical to these contracts, critical in insurance and in derivates.”
After Morgan wrote to the Government, Chancellor Philip Hammond replied that the Government was “alive” to risks passporting issues could have on areas like cross-border pensions.