Part VII transfer: Difference between revisions
Content deleted Content added
m Jake Brockman moved page User:Part VII transfer to Part VII transfer without leaving a redirect: second time lucky... |
GreenC bot (talk | contribs) Rescued 1 archive link. Wayback Medic 2.5 per WP:URLREQ#xyz.reuters.com |
||
| (12 intermediate revisions by 7 users not shown) | |||
| Line 1: | Line 1: | ||
{{Use dmy dates|date=August 2023}} |
|||
| ⚫ | A '''Part VII transfer''', also known as ''insurance business transfer scheme'', is a transfer of business or parts of a business under Part VII of the [[Financial Services & Markets Act 2000]] in the [[United Kingdom]]. Part VII transfers are a common tool used by [[insurance]] businesses to address required business transformation in preparation for or in response to [[Brexit]]. |
||
| ⚫ | A '''Part VII transfer''', also known as an '''insurance business transfer scheme''', is a transfer of business or parts of a business under Part VII of the [[Financial Services & Markets Act 2000]] in the [[United Kingdom]]. Part VII transfers are a common tool used by [[insurance]] businesses to address required business transformation in preparation for or in response to [[Brexit]]. |
||
== Background == |
== Background == |
||
Insurance companies based in the United Kingdom can operate in other parts of the [[European Union]] under a so |
Insurance companies based in the United Kingdom can operate in other parts of the [[European Union]] under a so-called EU passport arrangement for financial services. Under this arrangement, insurance policies for risks elsewhere in the EU, can be underwritten in the UK. With the UK's departure from the EU, insurers would not be able to pay out claims under such policies.<ref>{{Cite news |last1=Ralph |first1=Oliver |date=29 September 2017 |title=Insurers' risky Brexit bet |language=en-GB |website=Financial Times |url=https://www.ft.com/content/f7b5d9d0-a50a-11e7-b797-b61809486fe2 |access-date=2019-03-14}}</ref><ref>{{Cite web |date=21 September 2012 |title=Part VII transfers |url=http://www.theactuary.com/archive/old-articles/part-5/part-vii-transfers/ |access-date=14 Mar 2019 |website=The Actuary |publisher=[[Institute and Faculty of Actuaries]]}}</ref> According to the [[Financial Conduct Authority]], this could affect 38 million policyholders with policy values of up to GBP 55 billion.<ref>{{Cite news |last1=Ralph |first1=Oliver |date=27 August 2018 |title=EU contracts safe after Brexit, say most insurers |language=en-GB |website=Financial Times |url=https://www.ft.com/content/453e9156-a910-11e8-94bd-cba20d67390c |access-date=2019-03-14}}</ref> |
||
== Transfer == |
== Transfer == |
||
Under a Part VII transfer, |
Under a Part VII transfer, an insurance company will set up a separate [[Legal person|legal entity]] in an EU country that will service policies with EU clients after Brexit. A submission to a UK court will be made to transfer the book of business to this EU entity. Once approved, clients will need to be duly informed that their business will move. The process usually takes approximately 18 months. Prior to Brexit, 10 such applications were made to UK courts on average per year.<ref>{{Cite book|url=https://books.google.com/books?id=1kqgsGNvjIEC&q=part+vii+transfer&pg=PA94|title=A new approach to financial regulation: building a stronger system|last=Treasury|first=Great Britain|date=2011-02-17|publisher=The Stationery Office|isbn=9780101801225|language=en}}</ref><ref>{{Cite book|url=https://books.google.com/books?id=q5WBDwAAQBAJ&q=part+vii+transfer&pg=PT28|title=The Iskaboo Guide to Part VII Transfers|last=Hadley|first=Barbara|date=2016-03-07|publisher=BookBaby|isbn=9780957559547|language=en}}</ref><ref>{{Cite book|url=https://books.google.com/books?id=YbivAAAAQBAJ&q=part+vii+transfer&pg=PA306|title=Lloyd's: Law and Practice|last=Burling|first=Julian|date=2013-09-05|publisher=CRC Press|isbn=9781134501434|language=en}}</ref> Given the volume of transfers in the run up to the date when the UK leaves the EU, there have been reports about delays in court hearings.<ref>{{Cite web|url=https://www.postonline.co.uk/node/4023546|title=Insurers face Part VII transfer delays as Brexit looms|date=2019-02-13|website=Insurance Post|language=en|access-date=2019-03-24}}</ref> |
||
The [[Prudential Regulation Authority (United Kingdom)|Prudential Regulation Authority]] (PRA) which oversees insurance businesses has proposed increasing the fee it charges companies for such business transfers to GBP 20,000 effective 1 March 2019 given the complexity of the transaction.<ref>{{Cite web|url=https://www.insurancebusinessmag.com/uk/news/breaking-news/higher-fee-for-part-vii-insurance-transfers-looms-116314.aspx|title=Higher fee for Part VII insurance transfers looms|last=Gangcuangco|first=Terry|website=Insurance Business|language=en|access-date=2019-03-14}}</ref> |
The [[Prudential Regulation Authority (United Kingdom)|Prudential Regulation Authority]] (PRA) which oversees insurance businesses has proposed increasing the fee it charges companies for such business transfers to GBP 20,000 effective 1 March 2019 given the complexity of the transaction.<ref>{{Cite web|url=https://www.insurancebusinessmag.com/uk/news/breaking-news/higher-fee-for-part-vii-insurance-transfers-looms-116314.aspx|title=Higher fee for Part VII insurance transfers looms|last=Gangcuangco|first=Terry|website=Insurance Business|language=en|access-date=2019-03-14}}</ref> |
||
In a similar fashion, banks use the Part VII transfer framework to move their [[Swap (finance)|swap]] business to EU entities.<ref>{{Cite web|url=https://www.risk.net/node/6168671|title=Two banks begin moving swaps out of London, pre-Brexit|date=2018-11-30|website=Risk.net|language=en|access-date=2019-03-14}}</ref><ref>{{Cite news|url=https://www.thetimes.co.uk/article/barclays-shifts-190bn-assets-to-ireland-kczc9mh35 |
In a similar fashion, banks use the Part VII transfer framework to move their [[Swap (finance)|swap]] business to EU entities.<ref>{{Cite web|url=https://www.risk.net/node/6168671|title=Two banks begin moving swaps out of London, pre-Brexit|date=2018-11-30|website=Risk.net|language=en|access-date=2019-03-14}}</ref><ref>{{Cite news |last=Griffiths |first=Katherine |date=2019-01-31 |title=Barclays shifts €190bn assets to Ireland |language=en |work=The Times |url=https://www.thetimes.co.uk/article/barclays-shifts-190bn-assets-to-ireland-kczc9mh35 |access-date=2019-03-14 |issn=0140-0460}}</ref> |
||
Approaches and timelines chosen by companies vary given the cost and complexity of the transfer. While some companies have already transferred their business or are in the process of it, others are exploring alternative options.<ref>{{Cite web|url=https://www.reinsurancene.ws/lloyds-will-complete-transfer-to-brussels-by-2020-says-brexit-director/|title= |
Approaches and timelines chosen by companies vary given the cost and complexity of the transfer. While some companies have already transferred their business or are in the process of it, others are exploring alternative options.<ref>{{Cite web|url=https://www.reinsurancene.ws/lloyds-will-complete-transfer-to-brussels-by-2020-says-brexit-director/|title=Lloyd's will complete transfer to Brussels by 2020, says Brexit Director - Reinsurance News|date=2019-01-31|website=ReinsuranceNe.ws|language=en|access-date=2019-03-14}}</ref> As an alternative to Part VII transfers, some financial institutions have alternatively opted to sign new contracts with clients in their post-Brexit location.<ref>{{Cite news|url=https://uk.reuters.com/article/uk-britain-eu-idUKKCN1Q81YW|archive-url=https://web.archive.org/web/20190219213648/https://uk.reuters.com/article/uk-britain-eu-idUKKCN1Q81YW|url-status=dead|archive-date=19 February 2019|title=Aviva, NatWest to join 'Brexodus' of business to EU|date=2019-02-19|work=Reuters|access-date=2019-03-14|language=en}}</ref> |
||
== References == |
== References == |
||
{{Reflist}} |
{{Reflist}} |
||
== External links == |
|||
* [https://www.legislation.gov.uk/ukpga/2000/8/part/VII Financial Services and Markets Act 2000, Part VII] |
|||
* [https://www.fca.org.uk/publications/finalised-guidance/fg18-04-review-part-vii-insurance-business-transfers The FCA’s approach to the review of Part VII insurance business transfers] |
|||
[[Category:Financial regulation in the United Kingdom]] |
|||
[[Category:Insurance in the United Kingdom]] |
|||
[[Category:Brexit]] |
|||
Latest revision as of 22:41, 12 September 2024
A Part VII transfer, also known as an insurance business transfer scheme, is a transfer of business or parts of a business under Part VII of the Financial Services & Markets Act 2000 in the United Kingdom. Part VII transfers are a common tool used by insurance businesses to address required business transformation in preparation for or in response to Brexit.
Background
[edit]Insurance companies based in the United Kingdom can operate in other parts of the European Union under a so-called EU passport arrangement for financial services. Under this arrangement, insurance policies for risks elsewhere in the EU, can be underwritten in the UK. With the UK's departure from the EU, insurers would not be able to pay out claims under such policies.[1][2] According to the Financial Conduct Authority, this could affect 38 million policyholders with policy values of up to GBP 55 billion.[3]
Transfer
[edit]Under a Part VII transfer, an insurance company will set up a separate legal entity in an EU country that will service policies with EU clients after Brexit. A submission to a UK court will be made to transfer the book of business to this EU entity. Once approved, clients will need to be duly informed that their business will move. The process usually takes approximately 18 months. Prior to Brexit, 10 such applications were made to UK courts on average per year.[4][5][6] Given the volume of transfers in the run up to the date when the UK leaves the EU, there have been reports about delays in court hearings.[7]
The Prudential Regulation Authority (PRA) which oversees insurance businesses has proposed increasing the fee it charges companies for such business transfers to GBP 20,000 effective 1 March 2019 given the complexity of the transaction.[8]
In a similar fashion, banks use the Part VII transfer framework to move their swap business to EU entities.[9][10]
Approaches and timelines chosen by companies vary given the cost and complexity of the transfer. While some companies have already transferred their business or are in the process of it, others are exploring alternative options.[11] As an alternative to Part VII transfers, some financial institutions have alternatively opted to sign new contracts with clients in their post-Brexit location.[12]
References
[edit]- ^ Ralph, Oliver (29 September 2017). "Insurers' risky Brexit bet". Financial Times. Retrieved 14 March 2019.
- ^ "Part VII transfers". The Actuary. Institute and Faculty of Actuaries. 21 September 2012. Retrieved 14 March 2019.
- ^ Ralph, Oliver (27 August 2018). "EU contracts safe after Brexit, say most insurers". Financial Times. Retrieved 14 March 2019.
- ^ Treasury, Great Britain (17 February 2011). A new approach to financial regulation: building a stronger system. The Stationery Office. ISBN 9780101801225.
- ^ Hadley, Barbara (7 March 2016). The Iskaboo Guide to Part VII Transfers. BookBaby. ISBN 9780957559547.
- ^ Burling, Julian (5 September 2013). Lloyd's: Law and Practice. CRC Press. ISBN 9781134501434.
- ^ "Insurers face Part VII transfer delays as Brexit looms". Insurance Post. 13 February 2019. Retrieved 24 March 2019.
- ^ Gangcuangco, Terry. "Higher fee for Part VII insurance transfers looms". Insurance Business. Retrieved 14 March 2019.
- ^ "Two banks begin moving swaps out of London, pre-Brexit". Risk.net. 30 November 2018. Retrieved 14 March 2019.
- ^ Griffiths, Katherine (31 January 2019). "Barclays shifts €190bn assets to Ireland". The Times. ISSN 0140-0460. Retrieved 14 March 2019.
- ^ "Lloyd's will complete transfer to Brussels by 2020, says Brexit Director - Reinsurance News". ReinsuranceNe.ws. 31 January 2019. Retrieved 14 March 2019.
- ^ "Aviva, NatWest to join 'Brexodus' of business to EU". Reuters. 19 February 2019. Archived from the original on 19 February 2019. Retrieved 14 March 2019.