FSCS protection and the Transition Period
The UK has now left the European Union and we are in an transition period, which is currently due to end on 31 December 2020. During the transition period, EU law will apply in the same way as it did before the start of the transition period.
In the absence of further changes to reflect any new agreement on the future relationship between the EU and the UK, we expect that the rules we previously prepared for the UK’s withdrawal from the EU would apply at the end of the transition period. These are described briefly below.
Please refer to the FCA for FSCS protection relating to other financial services products.
Depositors with eligible deposits held by UK establishments of firms with Part 4A permission to accept deposits (or deemed Part 4A permission) would be protected by the FSCS.
Generally, deposits held outside of UK establishments would not be protected by the FSCS.
Deposits held by UK firms’ branches in the EEA would not be protected by the FSCS, but may be protected by the relevant EEA State’s deposit guarantee scheme depending upon the depositor protection regime in that EEA State.
The status quo for Gibraltar and Gibraltarian firms will be retained during the transition period, after which time new arrangements will be put in place as part of a new relationship framework between the UK and Gibraltar. Depending on the nature of those arrangements, further changes to PRA rules may be required.
Policies issued prior to the end of the Transition Period
Existing FSCS protection for insurance policies issued prior to the end of the transition period would be maintained as long as the insurer remains a 'relevant person' under FSMA. Status as a ‘relevant person’ is achieved by a firm being an ‘authorised person’ under FSMA at the time of the act or omission giving rise to the claim. Firms will be ‘authorised persons’ if they have a Part 4A permission, are an insurer within the Temporary Permission Regime or Supervised Run-off under the Financial Services Contracts Regime (with a deemed Part 4A permission), fall within Contractual Run-off under the Financial Services Contracts Regime, or have the benefit of market access rights via the Gibraltar Order for Gibraltarian-based firms.
Where an insurer transfers FSCS-protected insurance liabilities to an insurer without UK authorisation, FSCS protection would only be available for claims in respect of acts or omissions (‘insured events’) that arose before the transfer to the non-authorised successor.
Policies issued after the end of the Transition Period
Policies in respect of risks situated in the UK, Gibraltar, Channel Islands and Isle of Man issued by 'relevant persons' after the end of the transition period may be FSCS protected, depending upon the location of the establishment through which the policy is issued. The FSCS would not protect policies issued after the end of the transition period in respect of EEA risks.