Experts from across the financial sector have expressed their fears over a ‘no deal’ Brexit after the Government produced guidance in the eventuality of no agreement between the UK and EU.

Insurers, investment and finance professionals saw the release, this week, of the Government’s ‘what if’ literature as welcome contingency planning, but repeated calls for a ‘no deal’ Brexit to be avoided.

The ABI was strident in its criticism of the prospect of leaving the bloc without an agreement.

Hugh Savill, director of regulation at the ABI, said: “Leaving the EU without a deal would cause major inconvenience to millions of pensioners, travellers and drivers.

“We urge the Government to agree a deal as a matter of urgency.
 
“Today’s paper emphasises the risk of insurers not being able to make payments to customers based in the EU after the end of March next year.

“Obviously insurers want to meet their commitments to their customers, but this problem has the potential to affect millions of insurance customers, including UK pensioners overseas.”

He added: “It can be fixed by co-operation between the UK and EU regulators – if the EU authorities wish to do so.

“Insurers have of course been making contingency plans for their own operations for many months now, but this contract issue is not one that insurers themselves can fix.”

The Government’s advice document on ‘Banking, insurance and other financial services if there’s no Brexit deal’ does concede that EU-based UK pensioners may struggle to get access to funds.

It read: “In the absence of action from the EU, EEA-based customers of UK firms currently passporting into the EEA, including UK citizens living in the EEA, may lose the ability to access existing lending and deposit services, insurance contracts (such as a life insurance contracts and annuities) due to UK firms losing their rights to passport into the EEA, affecting the ability of their EEA customers to continue accessing their services.

“This could impact these firms’ ability to continue to service their existing products.”

But the document, unveiled by Brexit Secretary Dominic Raab yesterday, also insisted these were hypothetical scenarios and a ‘no deal’ result was “unlikely given the mutual interests of the UK and the EU in securing a negotiated outcome.”

Others weighed in and insisted a deal must be reached.

Stephen Jones, chief executive of UK Finance, said: “A ‘no deal’ scenario can and should be avoided.

“Both the UK and our EU partners should focus on agreeing a managed exit and a clear framework for cross-border trade including in financial services.

“However, it is right that contingency plans are made to minimise disruption for consumers and businesses on both sides of the Channel in the event of a ‘no deal’.”

He added: “The Government is taking a pragmatic approach to addressing critical cliff-edge issues and to ensure consumers and businesses can continue accessing vital cross-border services.”

Chris Cummings, chief executive of the Investment Association said: “Asset managers have been drawing up contingency plans to ensure they can continue to serve savers and investors in the UK and the EU.

“The point at which firms will have to activate their irreversible plans is drawing ever closer and failure to reach a deal is in no one’s interest.

“We are pleased to note that the FCA is ready to draw up bilateral Regulatory Cooperation Agreements.

“These are now urgently needed.
 
He added: “The most important step to protect our industry, and more importantly, the savings of millions of people across Europe, is for a comprehensive deal to be completed by March 2019.”