Contingency Measures to be enforced in a Hard Brexit scenario24 October, 2019
The Decree-Law 147/2019 sets several contingency measures to be enforced in a Hard Brexit scenario concerning Financial Services and Social Security.
The referred Decree-Law states the following topics:
In what regards to investment services and activities, UK-based credit institutions, investment companies and managing entities of collective investment undertakings (“OIC”) are allowed to continue providing services to investors in the Portuguese territory.
Under this regime, both UK-based credit institutions and investment firms may continue to provide such services to investors in Portuguese territory without having to have an establishment in Portugal, provided that:
i) Prior to the Brexit date, FCA – Financial Conduct Authority notifies the Portuguese Securities Authority (CMVM) of the intended maintenance of services of such entity in Portuguese territory; and
ii) Within three months of the Brexit date, the entity shall communicate to CMVM its intention to maintain its activity in Portugal, with the elements provided for in Decree-Law 147/2019.
iii) Within six months from the Brexit date, the entities shall submit an authorization request to CMVM. Until the application is submitted, credit institutions or investment firms may not act in respect of non-professional clients (they may only carry out the necessary operations to terminate ongoing contracts, if that is the case).
iv) The activity of UK entities within Portuguese territory must fully comply with Portuguese law and regulation.
The banking contracts that were concluded before the Brexit date, under the freedom of establishment and service providing regimes, may remain in force.
The concerned entities must notify Banco de Portugal of its intentions.
The insurance contracts covering risks in the national territory or in which Portugal is the Member State of Commitment (when the insurer is a UK-based insurance undertaking) and that have been concluded before the Brexit date, will remain in force but with no possibility of extension.
The rules established in the Decree-Law 147/2019 enter into force from the Brexit date (in a no-deal scenario), and it will remain in force until 30 December 2020.
Nuno Nogueira Pinto