Hundreds of thousands of people could lose access to their pensions if the UK cannot agree a deal on Brexit with the EU, the government says.
In a technical note published today the government provides guidance on how businesses should prepare for a no-deal scenario.
It explains how firms, financial market infrastructures, and funds authorised in any European Economic Area country can carry out many activities in any other EEA country through “passporting”.
However, if the UK crashes out of the EU without a deal the guidance says UK citizens living in the EEA may lose the ability to access existing insurance contracts such as annuities due to UK firms losing their passport rights.
A government white paper on Brexit has proposed an “equivalance of rules on an outcomes basis” regime for financial services allowing the UK and EU access to each others markets.
However this has yet to be agreed and the FCA has said it is continuing to make contingency plans for all Brexit scenarios, including no deal, as negotiations continue.
Commenting on the note, Association of British Insurers director of regulation Hugh Savill says: “Leaving the EU without a deal would cause major inconvenience to millions of pensioners, travellers and drivers. We urge the government to agree a deal as a matter of urgency.
“Today’s paper emphasises the risk of insurers not being able to make payments to customers based in the EU after the end of March next year.
“Obviously insurers want to meet their commitments to their customers, but this problem has the potential to affect millions of insurance customers, including UK pensioners overseas.”