Skip to main content
Normal View

Brexit Preparations

Dáil Éireann Debate, Friday - 6 September 2019

Friday, 6 September 2019

Questions (59)

Michael McGrath

Question:

59. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 194 of 11 July 2019, the number of the 57 credit institutions and 59 insurance firms from the UK or Gibraltar that have applied for or have already received authorisation from the Central Bank which would enable them to continue to do business here in the event of a disorderly Brexit; the value of the business done or the market share of firms that have not to-date sought authorisation from the Central Bank; the exposure here in this regard in the event of a disorderly Brexit; and if he will make a statement on the matter. [34812/19]

View answer

Written answers

Since the UK voted to leave the EU, the Central Bank has instructed firms on the need to have appropriate contingency plans in place to ensure continuity of business and to address key risks that may arise from Brexit.  

In relation to credit institutions, as at end July, the majority of the 57 credit institutions selling financial products and services from the UK and Gibraltar to Ireland, are implementing plans to mitigate the risks to Irish customers.  However, some risks to customers still remain including disruption / discontinuation of services or, where firms engage in unauthorised activity, lack of access to the Irish Consumer Protection Framework or the Financial Services and Pensions Ombudsman. While the Central Bank is not the home regulator for these credit institutions, through continued engagement with both credit institutions, the home regulator and subsequent analysis, the Central Bank believes that the exposure is quite small. Nonetheless, the Central Bank will continue to press credit institutions to continue to minimise this risk. The Central Bank will also consider the use of their regulatory powers on a case-by-case basis if a firm continues to conduct business in Ireland without the required authorisation.

In relation to how many credit institutions have applied for authorisation from the Central Bank. The Central Bank does not publish data on the number of applications for authorisation received.  The Central Bank does however publish a list of firms that are granted authorisation by them on their public Registers on their website (http://registers.centralbank.ie/DownloadsPage.aspx ).

In relation to the information sought on credit institutions in terms of the value of the business done or the market share of firms that have not, to date, sought authorisation from the Central Bank and the exposure here in relation to same in the event of a disorderly Brexit; I have been informed by the Central Bank that as these firms are prudentially regulated by their home authority and the Central Bank is not the home regulator, they cannot provide such information.

The Central Bank have informed me that there are a number of other ‘appropriate contingency plans’ for credit institutions which would mitigate the risks to Irish customers in the event of a disorderly Brexit, including receiving authorisation from another EEA Member State; continuing to service Irish customers where the law allows for this; transferring the book of business to a regulated entity or closing accounts.

It is the responsibility of each firm to satisfy itself, including through obtaining advice from its legal advisors, of its licensing and regulatory obligations under Irish financial services legislation, and (where relevant) seek alternative authorisations. Notwithstanding that primary responsibility, the Central Bank continues to actively engage with financial services firms regarding their Brexit contingency plans and communications to customers. They are also working closely with UK regulatory authorities.

Insurance Firms

In relation to the part of this question that relates to insurance firms, there are some clarification that need to be made.  This PQ is a follow on from PQ No. 194 of 11 July 2019 which referenced that the "latest insurance figures report 59 UK firms are actively writing Irish risk on a freedom of movement of services basis".  However, this PQ appears to be using this figure of 59 insurance firms as being the number of firms that have applied for or already received authorisation from the Central Bank, this is not the case.   Furthermore the PQ of 11 July 2019 requested information on UK firms which was provided (59 UK insurance undertakings) but this PQ refers 59 insurance firms from the UK or Gibraltar.

In that respect, I am advised by the Central Bank that 84 UK and Gibraltar authorised firms wrote Irish non-life and life risk on a Freedom of Service (FoS)/Freedom of Establishment (FoE) basis in 2017.

The total gross written premium (GWP) in 2017 on an FoS and FoE basis was:

- Non-Life: €1.9bn

- Life: €3.6bn

The Central Bank has received the Brexit plans for 82 of the 84 firms (98%) who operated here in 2017.

In relation to the ability of these firms to continue to write Irish risk, should they wish to do so, the plans indicate that 66 firms will or have established an Irish or other EU entity, use  fronting arrangements or  will apply to the Central Bank to establish a third country branch.

In relation to the other 16 firms, they advised the Central Bank that they had ceased writing Irish risk, were no longer authorised or would cease writing Irish risk. These firms will rely on the temporary run-off regime for existing contracts.

These firms accounted for the following percentage of 2017 gross written premium (GWP):

-    UK Non-life 2017 GWP                Less than 1%

-    UK Life 2017 GWP                       27%

-    Gibraltar Non-life 2017               22%.

These firms did not write any specific specialty or niche line of business.   

Finally, the Deputy will be aware that my Department and the Central Bank have worked closely to protect customers of insurance products in event of a “no deal” Brexit.   As I mentioned briefly above, in  that regard, provisions in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019 allow for a temporary run-off regime, which will allow certain UK and Gibraltar insurers and brokers to continue to service existing insurance contracts with Irish policyholders in the event of a “no deal’’ Brexit.

Top
Share