FSCS and the FSCR
If the UK leaves the EU without an Implementation Period, FSCS protection will be provided as follows to customers of firms in FSCR:
Deposit-takers with an establishment in the UK, and insurers that are in the FSCR, will be members of the FSCS and are expected to comply with the respective Parts of the PRA Rulebook. No transitional relief is available.
SS18/15 ‘Depositor and dormant account protection’ has been updated and describes the PRA’s expectations.
Deposit-takers in the SRO
Depositors with eligible deposits held by UK establishments of firms with Part 4A permission to accept deposits (or deemed Part 4A permission, in the case of SRO firms) will be protected by the FSCS.
Update 13 September 2019: We published a new waiver by consent to waive the Continuity of Access requirements contained in the Depositor Protection Part of the PRA Rulebook. More information is available on the EU withdrawal – Temporary permissions regime page.
Deposit-takers in the CRO
Deposits held outside of UK establishments (which may include deposits held by CRO firms) will not be protected by the FSCS.
Insurance Policies issued before exit day
Existing FSCS protection for insurance policies issued prior to exit day will be maintained as long as the insurer remains a ‘relevant person’ under FSMA. The term ‘relevant person’ includes a person that was an ‘authorised person’ under FSMA at the time of the act or omission giving rise to the claim. EEA firms in the SRO and CRO are authorised persons for this purpose and will also be required to pay FSCS levies.
Insurance Policies issued after exit day
The FSCR provides limited permissions for firms to perform existing contracts and does not allow a firm to carry out regulated activities in relation to new contracts, except where necessary to service pre-existing contracts. If policies are issued after exit day by SRO insurers with a UK establishment, FSCS protection would apply as it does for policyholders of insurers in the TPR, where policies in respect of risks situated in the UK, Channel Islands, Isle of Man or Gibraltar would be eligible for protection. If there are policies issued after exit day by SRO or CRO insurers without a UK establishment, FSCS protection would only be available in respect of risks situated in the UK.
Insurers no longer in the FSCR
There are a number of reasons why insurers could cease to be a ‘relevant person’. If a firm is no longer a ‘relevant person’ at the time the act or omission that give rise to the claim occurs (or the policies have not been transferred to a ‘relevant person’), FSCS protection will not be available. Existing FSCS protection would continue to be available for claims in relation to acts or omissions that arose before the loss of status.
The FCA is responsible for rules relating to FSCS protection for the following activities: investment provision, investment intermediation, insurance intermediation, debt management and home finance intermediation. For more information about the FCA’s approach for FSCS cover for firms in the FSCR, please refer to the FCA Consultation Paper CP18/29: ‘Temporary permissions regime for inbound firms and funds’.