Preparing for Brexit

Brexit is fast approaching. No one knows what will happen or all the implications but some planning points to consider are set out below:

Data Security

GDPR is unfortunately here to stay. The Government confirmed in December that even with a no deal Brexit that GDPR will continue. The Government have stated that they will make changes to the Data Protection Act 2018 to ensure it applies appropriately in the UK following Brexit. The ICO have also stated that it intends to permit data to flow from the UK to the EEA. Transfers from the EEA would, however, be impacted if there is a no deal Brexit.

We are still waiting on new e-privacy European legislation which appears to have hit another delay. It looks unlikely that it will be passed before the UK’s withdrawal. If that is the case then it wouldn’t apply to the UK unless the government decides to pass similar legislation in the UK.

Investments

Credit Unions holding investments in the EEA will be impacted by Brexit. Pre-Brexit investments will be able to be held until maturity. Any investments in the EEA will only be able to be held until the end of the transitional relief period. After this period Credit Unions would pnly be permitted to invest in UK registered financial institutions. The PRA have stated that all but one EEA banks that Credit Unions currently invest in (as of December 2018) are planning on applying for a UK authorisation. For more information please see the PRA Policy Statement 5/19 by clicking here. Please note appendices in this policy statement are “near final” and will be updated close to exit day.

Business Planning

The exact impact on the economy is unknown. It is therefore very difficult to predict the impact on bad debts, shares and loans. Scenario planning of various outcomes as part of your business planning can help you to prepare or alert you to sensitivities in your business.

Legislative Reform

The chance of reform of Credit Union legislation in the short term is very low with the impact of Brexit on existing legislation and the economy the focus of parliament.

More information on the impact of Brexit for financial organisations is available on the FCA page which can be found by clicking here.