The United Kingdom Treasury has warned U.K. consumers that a messy departure from the European Union’s European Economic Area (EEA) could, possibly, break some cross-border life insurance policies and annuity contracts.
The Treasury gave that warning today, in one of a batch of 25 “technical notices” discussing the possible effects of a poorly structured “Brexit.”
Officials posted the notices to describe what could happen in a Brexit without an exit agreement, or a “no deal” scenario. Such a scenario “remains unlikely, given the mutual interests of the UK and the EU in securing a negotiated outcome,” officials say in the notice.
In a no-deal scenario, EEA customers of U.K. financial services firms could face serious problems, officials say.
Those EEA customers of U.K. companies “may lose the ability to access existing lending and deposit services, insurance contracts (such as a life insurance contracts and annuities) due to U.K. firms losing their rights to passport into the EEA, affecting the ability of their EEA customers to continue accessing their services,” officials say. “This could impact these firms’ ability to continue to service their existing products.”
The U.K. government will do what it can to resolve any conflicts on the U.K. side, officials say.
But the U.K. officials acknowledge that they have no way to do anything to help customers in the European Economic Area without help from EU officials.
Many U.K. companies are trying to avoid problems like that by making sure they have EU-based subsidiaries, to ensure that they have a mechanism they can use to keep current relationships in place, officials say.
A copy of the notice is available here.
— Read U.K.’s Retired Sun Seekers Risk Losing Pensions After Brexit, on ThinkAdvisor.