The UK is due to leave the European Union on March 29, 2019, although it is proposed there is a transitional period for 18 months-2 years after that whereby the UK effectively remains within the EU for the purposes of financial institutions.

However, the EU mantra of “nothing is agreed until everything is agreed” and the fact that agreements made in phase one, including any political commitment to transitional arrangements, are not truly binding means the final deal is likely to hang in the balance for some time to come. 

Firms in the financial sector have been asked by regulators to plan for a wide range of possible outcomes, including the “hard Brexit” scenario, whereby the UK exits the EU in March 2019 without any new trade arrangement , withdrawal agreement or equivalence determinations in place.

This briefing discusses the key areas for consideration in the contingency plans of UK financial institutions with cross-border activities between the UK and the rest of the EU. Our experience of advising in this area is that some UK firms have jumped straight to a "subsidiarization model" for EU client business, without properly considering other available and legally possible optimization structures. Here, we consider the relevant steps and structuring a firm can undertake to promote a firm's and its clients' compliance with legal and regulatory obligations with minimal dependence on political outcomes, legislative changes and/or government or regulatory approvals.

View full memo, Brexit Contingency Planning in Financial Services: Have All The Angles Been Considered?