Communication to financial intermediaries and other stakeholders on preparedness for a possible no-deal BrexitCommunication no longer relevant or applicable following ratification of the withdrawal agreement

On 8 October 2019, the European Banking Authority (EBA) published a Communication that urges financial intermediaries to prepare themselves for the United Kingdom's withdrawal from the European Union (Brexit), especially in relation to certain issues.

With regard to banks' relocation plans and the related authorisations, the EBA - in line with its previous communications - underscores how imperative it is that, from the first day after a no-deal Brexit, all intermediaries operating in the EU have the capability to autonomously manage their risks. As regards compliance with the data protection regulations, the EBA reiterates that banks must be prepared to ensure compliance with the EU's General Data Protection Regulation (GDPR) starting from 1 November 2019, in the event that the UK withdraws without an agreement. Lastly, in relation to customer communication, the EBA again highlights the importance of financial intermediaries providing their customers with clear and adequate information; if this has not yet occurred, customers should contact them directly.

In line with the EBA Communication, the Bank of Italy calls the attention of UK intermediaries offering services in Italy - whether through branches, under the freedom to provide services or through agents or affiliated parties - to the disclosure requirements set out in Decree Law 22/2019,* which include the disclosure that banks must provide to depositors concerning the protection of their deposits. Specifically, as soon as the terms of the UK's withdrawal become known, banks will have to promptly inform their depositors as to whether they adhere to an Italian deposit guarantee system or whether they adhere to the UK deposit guarantee system. For information on investor protection, please consult Consob's website.

Moreover, the Decree Law also sets out the steps that UK institutions must take vis-à-vis the competent authorities: a) the banks and electronic money institutions operating through branches that intend to continue to operate in Italy, are required to notify the competent authorities, as set out in Article 3; and b) the intermediaries that must cease their activities pursuant to Article 4, are required to communicate the measures taken for the orderly termination of their activity. The relevant forms are available on this website. For information concerning investment firms, please consult the above-mentioned Consob website.

Lastly, in August the Bank of Italy signed a Memorandum of Understanding (MoU) with the UK supervisory authorities: the Bank of England/Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA). The MoU, which will be applied in the event that the UK withdraws from the EU without an agreement, is based on a template prepared by the EBA in collaboration with the European Central Bank and the competent national authorities, including the Bank of Italy, which addresses the need for cooperation in supervising the banking sector and investment services. The MoU is supplemented by a side letter, signed by the Bank of Italy and the FCA. The side letter extends the scope of the MoU in areas that are relevant to the Bank of Italy's supervision of the financial markets and asset management companies, and which help the Bank to verify compliance with the obligations and restrictions on short selling contained in Regulation (EU) No 236/2012. The signing of the MoU and the side letter satisfies one of the conditions set out under national law for the authorization of Italian intermediaries and market operating companies to operate in the UK, and vice versa.

* Please see also the communication to intermediaries published in February 2019.