Following the referendum vote to leave the EU, WTW has released the following advisory notice that I thought would be of interest to you. More information will be forthcoming later today, and there should be regular updates on our website and via the Market Security Group.
Please let me know if you have any items that you would like me to investigate further, although it is clearly very early days so the situation will be developing day by day.
Willis Towers Watson Notice
■ Following yesterday’s UK referendum vote to leave the EU, Willis Towers Watson will be working closely with its clients in the coming weeks and months to determine the precise implications of the vote for their business and to support them through this period of change. Although the exact consequences for future policy and regulation remain unknown at this time, we would like to make the following initial observations.
■ There will be no immediate change. Article 50 of the Lisbon treaty provides for two years, from the date the UK gives notice to the Council of Europe, to negotiate exit terms. It is worth noting that the UK will not invoke Article 50 immediately as there will first need to be a vote in Parliament. In addition, there will most likely be a period of change within Government itself which will delay the process further.
■ The protection of client monies remains one of our primary concerns and we do not envisage any immediate change to the regulatory system around this key element of client protection.
■ Individual insurance requirements and coverage may in time need to be amended as the details of the exit terms become clear. As mentioned above, we assume that the exit negotiations may take several years to complete. Any action to review and amend current insurance coverage will be influenced by this timetable. For our clients who have insurance arrangements that are expected to carry over for a number of years, we will be working with those clients to identify where changes can and should be made.
■ For insurers, the vote to leave will lead to a period of uncertainty as regards their business operating models. However, underpinned by the strong customer centric regulation in the UK and European Union, we do not see material risk to clients generally in terms of insurers’ ability in the immediate future to meet their obligations. There is evidence that insurers may be better placed than other financial sector entities to manage the volatility of a UK withdrawal. The Willis Towers Watson Market Security Group continues to monitor the impact on insurers, with commentary available as updated on our website shortly.
■ During this time, we are closely monitoring the situation. An internal taskforce, comprising of representatives across the company, has been and will continue to meet regularly to consider the implications not just to our clients but also for us as a company to ensure we maintain the level of service you expect from us.
What happens now?
For matters concerning retirement benefits, pension scheme investments and insurers, it is unlikely that there will be any significant change in the near future. Existing provisions in relation to financial legislation – including Banking Union, Solvency II, EU-wide legislation covering investments (including UCITS, AIFs and the like) as well as passporting rights will continue until such time, if at all, as these are amended under renegotiated terms.
Willis Towers Watson will be monitoring any changes in legislation which may affect insurance contracts – both those currently in force and in the future that will arise from negotiations by the UK to leave the EU. We will advise clients of changes which may affect insurance coverage and we shall propose appropriate remedial action.