Europe: The Final Countdown

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Please accept our apology, 2020 has been an eventful year and as we approach 2021 we couldn’t resist a glam-rock nostalgic trip back to 1986 and a Top of the Pops number one. Turn up your speakers and click on play below:

Back from 1986, hanging up the leathers and having had a hair-cut; it’s time to get serious: We’ve published several articles exploring the potential impact of the end of the transition period. It is disappointing, but not surprising, that so much is still unknown.

We note that all the reports talk of ongoing discussions about a trade deal, this is a very important distinction, as “trade” does not usually include financial services, which ordinarily falls under the “services” umbrella.

At the time of writing (15th December), negotiations are still ongoing; but, it is a matter of fact (and law) that the UK’s post-EU transition period comes to an end as does the year. Until the government confirm to the contrary we are assuming the following positions will apply from 1st January 2021:

  • We will only be able to advise clients in the EEA using ‘reverse solicitation’ rules. Any such clients are unlikely to benefit from the protective umbrellas of the Financial Ombudsman Service or the Financial Services Compensation Scheme.
  • From 1st January 2021, we will treat all EEA resident clients as we would do any clients resident in the rest of the world. This will mean changes to what clients can and can’t do with their financial planning solutions, particularly tax-preferred solutions such as Individual Savings Accounts and Pensions
  • EEA resident British expatriates are likely to find that their UK bank will no longer support their account (this is happening already), so clients may need to change their banking arrangements to continue to receive income or capital from their investments and pensions (including any State Pension payments)
  • After the end of the transition period, clients who live in an EEA country will still be able to make existing regular contributions or transfer from another provider into some (but not all) non-tax-preferred investments.
  • From January, clients who live in an EEA country will still be able to pay existing regular contributions or make a single contribution to their SIPP, up to £3,600pa for the next 5 years. They can also transfer UK pensions between most UK providers.
  • From January, clients who live in an EEA country will no longer be able to make regular payments or single top-ups into their Individual Savings Accounts (ISAs), although they will still be able to transfer between some providers.
  • Financial Services Compensation Scheme (FSCS) protection with regards to Irish offshore bonds is likely to change. UK policyholders’ ability to claim the FSCS will depend on the terms of the deal struck between the UK and the EU. If no deal is reached, from 1st January 2021, UK policyholders will not be able to claim on the FSCS. Protection may still be offered by the Irish regulations.
  • The UK’s sovereign debt credit rating, and therefore the cost of government borrowing, could come under pressure if there is a no-deal outcome and if the global rating agencies take a negative view of the political and economic consequences of failing to reach a trade agreement with the EU. Such a downgrade will impact on fixed interest investments and potentially domestic interest rates.
  • The 2007 Hague Convention will likely replace the European Maintenance Regulations, meaning there will no direct jurisdiction for divorce actions (and financial settlements) between the UK and the EU states
  • From 1st January, we suspect that British European property owner’s estates will no longer benefit from the European Succession Regulations. If this is the case, clients will need to urgently address both their UK and their European testamentary instructions.
  • Many people take advantage of competitive deposit rates from the UK branch of foreign banks. Banks based within the European Economic Area have been allowed to sell their services in the UK without being covered by the Financial Services Compensation Scheme. In the event, such providers fail we can not be certain what level of protection (if any) their home country’s compensation scheme would extend to a UK resident citizen in the event of a failure.


In preparation for the end of the transition period, we have conducted a thorough review of our operational readiness and the potential impact on our clients in the event of an EEA financial provider failing.

Until the UK strikes a deal or determines to proceed on World Trade Organisation terms outside of the EU we expect continued market volatility, but, we remain confident for the future, irrespective of the negotiation outcome. Additionally, we understand that the Government plans to incorporate the EU’s General Data Protection Regulations (GDPR) into UK law after the transition period. We are content our systems will continue to comply with data protection regulations in both the UK and the EU.

Please remember that this post is based on our current understanding of a far from a certain outcome. We will update our news feed as and when reliable information becomes available.

Don’t hesitate to contact us should you have any queries or concerns.

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