On 29th March, 2019, unless further decisions are taken, the United Kingdom’s withdrawal from the European Union (Brexit) will take effect; i.e. two years after the British government notified the European Council of its intention to leave the EU.
After complex negotiations, in November 2018 the EU and the UK agreed on a draft withdrawal agreement. The agreement establishes a transition period (lasting at least until the end of December 2020) during which the European Treaties and EU legislation will continue to apply to the United Kingdom. During the transition period the two parties are to negotiate an agreement on future EU-UK relations, whose main elements are outlined in a political declaration agreed at the same time as the draft withdrawal agreement.
Nonetheless, if the withdrawal agreement is not approved by the UK Parliament and consequently fails to come into force, bilateral EU-UK relations could be broken off abruptly (the cliff-edge scenario) on 29th March.
Among other things, the current system of mutual recognition of authorizations and of supervisory systems for financial markets and intermediaries (the single passport) would cease to apply.
European and Italian authorities and institutions are working to ensure adequate preparation for a no-deal Brexit with banks and other financial intermediaries – including payment services providers – being called upon to actively prepare for the consequences of such a scenario. In any case, the Italian government is currently drafting specific legislation (under close consultation between Supervisory Authorities and Minister of Treasury) aimed at ensuring the stability, the integrity, and the operational continuity of its financial system.
In this scenario, the Bank of Italy has called on British banks, payment institutions and e-money institutions providing services in Italy to inform their Italian clients about the actions they have taken in relation to Brexit and any consequences which this may have on the provision of those services.
More specifically, all banks, payment institutions and e-money institutions based in the United Kingdom that currently provide services in Italy via branches, under the freedom to provide services, or by means of a network of agents, shall promptly:
In line with the applicable statutory regime, financial institutions shall meet their contractual obligations in full and comply with the regulatory measures applicable for the provision of services in Italy, including those related to contract termination, switching of payment services, proposals for unilateral contract amendments and transfer of business.
If significant effects on contractual continuity or on customers' rights are expected, financial institutions must promptly inform the Bank of Italy, using the dedicated email addresses (certified email address [email protected] and the ordinary email address [email protected]).
Lastly, please be advised that Bank of Italy has activated on its website a new section dedicated to providing information on Brexit.
Should you have any questions about the above, please do not hesitate to contact one of the members of the Bird & Bird global payments team.