Brexit – A new statement from the Bank of Italy warns UK firms of possible licensing breaches
With 16 days to go until the end of the Brexit Transition Period, the Bank of Italy has published a new communication on its website, warning that from 1 January 2021 it will regard as “abusive” the provision of banking and financial services in Italy by UK firms not having obtained a local licence.
The Bank of Italy statement
As the end of the year approaches, so is the end of the transition period agreed by the UK and the EU pursuant to Article 126 of the Brexit Withdrawal Agreement.
With this in mind, the Bank of Italy has published a new communication addressed to UK firms, reminding them once again that after completion of the UK's withdrawal from the EU on December 31st, they will have to stop operating in Italy unless they have obtained a new authorisation to do so.
This time, however, the Bank of Italy has expressly warned that from 1 January 2021 the provision of banking and financial services in Italy by UK firms no longer authorised thereto is to be considered as abusive – therefore recalling the Italian criminal offence (abusivismo) that is indeed triggered by the unauthorised provision of regulated activities.
This seems to indicate that the Bank of Italy would show little sympathy to UK firms continuing to operate in Italy in 2021, irrespective of the uncertainties that still surround the future relationships between the EU and UK.
The last of many warnings
The Bank of Italy’s statement comes as no surprise, considering that it is just the last of many warnings. Indeed, the Bank of Italy emphasises in its communication that UK firms have already been invited several times to duly prepare for Brexit.
The Bank of Italy has issued specific guidelines (with the last one being its Communication of 29 April 2020, which we have described here) on all the available options, such as those to continue providing services in Italy as third country firms, to transfer the business to another – already existing or newly established - firm active in Italy, or to cease providing services by the end of this year.
The attention of UK firms has also been drawn to the need to promptly inform their clients on what will happen to their existing contracts (reference is made to the Communication of 19 February 2019, mentioned also in the April one), with a view to enable them to make informed decisions as to whether maintaining or terminating such contracts.
Moreover, in a recent press release published in Italian language on 9 November 2020, the Bank of Italy has also invited the clients of UK firms which did not receive any communication from them around these topics, to contact them immediately to request information.
Finally, also the EBA and the European Commission have issued guidance and called upon UK firms to make suitable plans for an orderly management of Brexit (lastly with, respectively, a press release on 9 November 2020 and a Notice to Stakeholders of 7 July 2020) and to avoid adverse effects for their clients (reference is made to the EBA Communication of 8 December 2020).
What UK firms must do (if they haven’t already)
Accordingly, the Bank of Italy states in its Communication that it expects UK firms to have already informed their clients about the impacts of Brexit and to have already managed the transition in a careful and orderly way. Nevertheless, it reiterates that firms shall complete their Brexit plans by December 31st (unless of course they have already done so).
To ensure that customers receive the highest attention, the Bank of Italy urges UK firms to enhance their tools and channels for customer support and communication, including online ones, and to keep them running also after the transition period will have expired. In particular, firms shall at least make clear:
- the contacts of the offices to which clients can refer for receiving assistance on their specific needs, as well as the procedures for submitting requests or complaints;
- the alternative dispute resolution system to which they adhere to;
- for banks only, the deposit protection scheme applicable to the existing contracts; and
- if the existing contracts were to be maintained, also any change that may occur after the end of the transition period.
Finally, the Bank of Italy calls upon UK firms to make every endeavour to limit any adverse effect that may derive from having interrupted the provision of services to their clients. In any case, clients shall be allowed to exercise all and every power granted to them by the law and/or the relevant contract, in relation to either the continuation, the transfer or the termination of the existing relationship.
We are continuing to support our clients on this, please do not hesitate to get in touch if we can help.
