A survey from ICAS has found that nearly three-quarters (73%) of finance professionals believe that a no-deal Brexit is ‘very’ or ‘quite’ likely, but only half say their organisation has prepared for that outcome from the current negotiations over the UK’s withdrawal from the EU
The Brexit Tracker Survey, carried with law firm Brodies and based on a poll of over 300 ICAS members, found that 56% of finance professionals said that their organisation is prepared for a no-deal Brexit, while a quarter (26%) feel ‘quite unprepared’ and 8% ‘very unprepared’.
However, only around one in three believe that the UK will formally leave the EU on the appointed date, 29 March.
Bruce Cartwright, ICAS chief executive, said: ‘Our major concern is that the clock is ticking down to 29 March and although the UK government is publishing more guidance there is very little time left to implement it.’
The survey found only 32% of organisations employing EU nationals were positive that management had explained the requirements to register for residence, while only 49% of those expecting to travel to the Schengen zone (for work or otherwise) were aware of the travel rules that might apply following a no-deal Brexit.
Less than half (46%) of those with contracts that might be affected by a no-deal Brexit had reviewed those contracts.
In addition, 22% of exporters that might require an economic operator registration and identification scheme (EORI) number were still in the process of applying for one and 25% had not even started the process.
Data transfer warning
Separately, EY is warning that financial services firms need to ensure they do not breach data rules in the event of a no-deal Brexit or risk a fine of up to 4% of turnover.
A no-deal Brexit would mean personal data cannot be sent from the EU to the UK unless firms have taken specific mitigating action. The issue has arisen as the European Commission has said it would not provide immediate data adequacy for the UK in the event of a no-deal. The penalties for breaching the rules are high, with firms facing fines of 4% of turnover or €20m, whichever is the highest.
EY’s own polling, from February 2019, found almost a quarter (24%) of financial services firms see the issue of data transfers as one of their top three worries around Brexit.
Steve Holt, UK and EMEIA financial services partner at EY, said: ‘UK financial services firms spent large amounts to get ready for GDPR but they must again ensure that their data systems are ready for a possible no-deal Brexit.
‘Firms also need to be aware of risks from their clients and suppliers as individual firms are still responsible for their customer data with third parties. There may also be a need to update privacy notices, as these often require explicit consent if data is transferred outside of the EU.’
The UK Government intends to enact statutory instruments in the event of a no-deal to ensure a legal status quo for data transferring outside of the UK. This means a no-deal would only be an issue for personal data transferred to the UK from the EU.
It is unclear how long it would take the UK to gain data adequacy from the EU if there was a no-deal Brexit. If there is an agreed Brexit deal then transfers would not be restricted through the proposed transition period to the end of 2020.
EY’s guide, Approaching the deadline: no-deal Brexit considerations for financial services is here.
Report by Pat Sweet