Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what estimate his Department has made of the number of financial service contracts that will require (a) repapering and (b) novating after the UK leaves the EU.

The Financial Policy Committee (FPC) is responsible for reviewing risks to the UK’s financial stability following its exit from the EU, including legal uncertainties concerning existing cross-border financial services contracts sold under passporting arrangements. This affects both UK and EU financial services firms and their customers. The FPC estimates that 10 million UK policyholders and 38 million EEA policyholders could be affected.

Whilst coordination between the UK and EU is required to fully mitigate contractual continuity risks, the UK government has been clear that, per its 20 December 2017 announcement, it will legislate if necessary to ensure that contractual obligations can continue to be met, mitigating the effect of withdrawal on existing contractual relationships for inbound firms.

There is a shared interest for both the UK and the EU to ensure that we avoid outcomes that impose unnecessary costs and disruption on individuals and businesses as the UK leaves the EU. It is vitally important that we work with our European partners to put the technical arrangements in place to avoid financial market disruption.