With about three weeks left before the UK says goodbye to the European Union, a bit of certainty has finally arrived in the form of Memoranda of Understanding (MoUs) between British regulators and EU authorities.
In a joint announcement, the Bank of England (BoE) and the Financial Conduct Authority (FCA) said the latter and BoE’s Prudential Regulation Authority (PRA) have agreed MoUs covering supervisory cooperation and exchange of information in the event of a hard Brexit, or that without a withdrawal agreement and implementation period.
A bilateral MoU with the European Insurance and Occupational Pensions Authority (EIOPA) on information exchange and mutual assistance in the field of insurance regulation and supervision has been agreed. Meanwhile a multilateral MoU with European Economic Area (EEA) national competent authorities relates to supervisory cooperation, enforcement, and information exchange.
A separate EIOPA release said the MoUs are aimed at maintaining not only sound prudential and conduct supervision over affected (re)insurance undertakings and groups but also stability of the financial markets within the EEA and/or the UK.
It added: “The MoUs provide for the reciprocal flow of appropriate and reliable information to ensure risk-based and effective supervision of (a) cross-border (re)insurance establishments incorporated either in the UK or in an EEA member state, (b) cross-border groups, or (c) special purpose vehicles established in the UK or in an EEA member state.”
Commenting on the development, PRA chief executive Sam Woods cited their strong working relationship with European partners and his confidence “that this will continue.” He believes the MoUs with EIOPA and EU member states will ensure sustained cooperation in carrying out supervisory responsibilities.
FCA CEO Andrew Bailey, for his part, stated: “I am pleased we have been able to agree these MoUs, which will allow for continued close cooperation in the event the UK leaves the EU without a withdrawal agreement. EU and UK insurance markets will remain interconnected in any scenario and therefore continued cooperation with our EU counterparts is of the upmost importance.”
Concurring, EIOPA chairman Gabriel Bernardino pointed out the MoUs’ role in meeting the primary objective, which is to protect policyholders and beneficiaries in case of a no-deal Brexit.