France made its boldest attempt yet to attract UK financial services firms should passporting rights be lost in a hard Brexit scenario.
On 28 September 2016 French regulators announced fast-track and simplified licensing procedures for UK based firms operating in France using the passporting mechanism (freedom to provide services).
There are currently 217 UK based insurance firms operating in France under the passporting mechanism, according to figures provided by the ACPR.
“As all players in the Paris financial market are gearing up for the challenges posed by Brexit, the Autorité de contrôle prudentiel et de résolution (ACPR) and the Autorité des marchés financiers (AMF) are getting ready to welcome British-based institutions that wish to locate their business in France,” the authorities said in a joint statement last week.
“For existing activities that are already supervised by the competent authority in the home country, the licensing procedure may be simplified and speeded up. This will be done by using documents already available in English such as forms that have been submitted to the supervisory authorities in the home country and papers concerning a branch whose business will be taken over by the subsidiary firm.”
The AFM is also launching AGILITY, which it describes as “a dedicated welcome programme for management firms and FinTech companies based in the UK”.
Unsurprisingly, response from the UK has been lacklustre.
Hugh Savill, director of regulation, ABI, dismissed the announcement pointing out that the UK is Europe’s largest insurance market that offers a wealth of expertise and a competitive business environment, including labour laws and tax regimes.
“It is unlikely that announcing the intention to speed up licence procedures would be enough to make France a destination of choice for UK insurers,” he said.
The views of the ABI are echoed by others. Oliver Wareham, partner of Slaughter and May, added that the perceived inflexibility of French employment law would further diminish France’s attractiveness as a place to base an EU financial services operation.
Mr Wareham also questioned the capacity and expertise of French regulators to manage an influx of applications. “It also remains to be seen whether the French regulators will have the personnel and expertise to deal with a substantial increase in the number of regulated entities with material operations in France, not least (in the insurance context) in dealing with internal models,” he added.
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