Brexit and what this may mean for you
Brexit, and the uncertainty surrounding withdrawal dates and the terms of the withdrawal, has created a lot of anxiety. We are aware that many of our clients are concerned about how they might be affected, particularly about the potential impact of Brexit on investment markets.
We also have a number of clients with investments provided by firms based in non-UK European Economic Area (EEA) countries, such as Ireland, who might be worried about their
consumer protection rights post-Brexist. Finally, we have a small number of clients who live outside of the UK but within the EEA, who need clarification as to whether or not we can continue
to provide services to them.
While the definitive position is not yet known, the purpose of this bulletin is to inform you of the potential impact of Brexit in relation to these issues.
What effect could Brexit have on my investments?
The actual impact will be dependent on the terms under which the UK leaves the EU, but whatever happens, no-one can accurately predict exactly how investment markets will be affected by
Your investment portfolio was created taking a number of factors into account, including:• your stated objectives and needs;
• how long you intend to invest;
• a risk-based approach (your attitude towards investment risk) that was agreed upon at the time of investment; and
• your ability to bear losses to capital, and/or reductions in income (where relevant
Of course, investments will go up and down in value, and the returns they provide will fluctuate and cannot be guaranteed. Most investments are designed to be held over the medium to long term and we would caution against making any decision to sell or retain investments based on the potential impact of Brexit alone, or indeed any short-term fluctuation in value.
We will continue to provide advice or guidance to you based upon your previously stated objectives and preferences, and in accordance with your existing service agreement. However, if you feel that your circumstances or appetite for risk has changed, please do get in touch so that we can discuss this with you.
I hold money in funds/investments that are provided by a non-UK EEA company – what will happen to these holdings?
You should still be able to continue holding these investments, even in the event of a ‘no deal’ Brexit. This is because the UK Government and the Financial Conduct Authority (the UK financial
services regulator) have put in place special measures to enable these companies to continue offering services to you.
Will Brexit affect the consumer protection I receive on my investments?
The vast majority of our clients are protected under the UK system, which comprises:
• the Financial Ombudsman Service (FOS), whose role is to settle disputes between consumers and UK-based financial services firms. After Brexit it is proposed that you will continue to be covered by the FOS, even where your complaint relates to the activities of an EEA-based firm that provides financial services in the UK; and
• the Financial Services Compensation Scheme (FSCS), which provides compensation (up to a prescribed level) to consumers where a UK-based financial services firm goes out of business. Post Brexit, the FSCS will remain open to UK consumers.
If you have investments with a non-UK EEA company you will typically not be covered by the FSCS, but by the compensation scheme of the country that the firm is based in. Brexit could result in a loss of access to these EEA compensation schemes if no deal is reached. This loss of access is dependent on the terms of withdrawal and remains far from certain. You may receive communications from such product providers but, again, it is unlikely that they will be able to provide definitive information at this stage.
I live in the EEA – will you still be able to provide me with advice after Brexit?
Currently, we can provide financial services to clients living in certain other EEA countries under arrangements known as ‘passporting’. Under current proposals these ‘passporting’ arrangements will cease with immediate effect when the UK leaves the EU. Accordingly, our ability to provide services to non-UK resident clients who live in the EEA would be affected.
We will get in touch with clients in this situation under a separate cover to discuss options and agree the basis for service going forward. For example, we could offer a service but only where it would be possible for all communications and advice to take place in the UK. Where this approach is not suitable, for example, if more regular reviews would be required, it could be more appropriate for clients to appoint another advisory firm based in the EEA State concerned.
The Brexit situation continues to develop and accordingly the information provided in this bulletin may be subject to changes which may occur in the short term. If you would like to discuss any of the issues raised, please do not hesitate to contact us, either by speaking to your usual adviser or by sending an email to: