Financial Services
What financial services may be affected?
Banking, insurance and securities services that British institutions provide in the European Union (EU) or EU institutions provide in the United Kingdom (UK).
What will happen with the financial sector as from 1 January 2021, once the Transition Period is over?
Following the Transition Period, the UK will become subject to the regime for third countries provided for in EU and national law. This regime includes the possibility of the recognition of equivalence in certain financial sub-sectors. This equivalence would allow British operators to maintain access to the European market. The European Commission has already approved equivalence decisions in other fields; the UK is also undergoing a process to approve equivalence in some areas.
May new financial services be contracted with British institutions as from 1 January 2021?
Not in general. Following the Transition Period, institutions authorised by the UK may not sign new contracts with Spanish clients as they will lack a valid authorisation to provide financial services in our country. In order to provide them, British institutions that operate in Spain must apply for an authorisation to set up a Spanish institution or adhere to the requirements of third countries. The Bank of Spain, the National Securities Market Commission and the Directorate-General of Insurance and Pension Funds will advise institutions in this process.
Will Spanish financial institutions be able to continue providing financial services in the UK?
Not in general. Spanish institutions that wish to maintain their activity in the UK must adhere to the conditions set under British law to provide financial services by institutions located outside of British territory.
Will contracts signed with British counterparties remain in force?
Yes. The parties will remain subject to the obligations deriving from contracts signed before 1 January 2021, although this implies, in certain cases, the need for institutions domiciled in the UK to obtain an authorisation to incorporate a Spanish institution or act under the regime for third countries.
What should I do if I have entered into a contract with a British counterparty?
Ask for information from the financial institution with which you have entered into the contract.
Clients of financial services that have signed up for a product that matures after 31 December 2020 with an institution domiciled in the UK should ask for information on the plans of the British institution to continue their activity in Spain after the Transition Period. The institution providing the service must inform the client and take the necessary adaptation measures. Similar guidelines apply for contracts between clients that are resident in the UK and institutions domiciled in the EU.
What happens if my British insurance company informs me that it has decided to transfer my insurance contract to another institution that may operate in Spain?
The institution must inform you on an individual basis of your entitlement in these cases to terminate the insurance contract, and they must return to you the proportional part of the premium for the remaining time until the maturity of the insurance in the event that you decide to exercise the right to termination, given that in the end they will not cover you during the period of time that elapses as from you exercising your right to termination of the insurance contract until such time as the policy matures.
This practice is correct on the part of the institution. The institution may transfer your policy to another institution so that you are still covered until the policy matures. This transfer will be overseen by the corresponding authorities and require the conformity of the Directorate-General of Insurance and Pension Funds before your policy can be transferred to another institution.
What requirements apply to British insurance companies that transfer their portfolio to a subsidiary in the European Union?
Without prejudice to the provisions of British law for portfolio transfer operations, by way of additional guarantee, it is established that the Directorate-General of Insurance and Pension Funds must provide its conformity for the transfer of a portfolio to another Member State when Spain is the Member State of the commitment or location of the risk.
Non official translation