Legal Framework

Warning Notice no. 3 of March 12, 2019

Brexit - Implications for the provision of investment services and activities by intermediaries.

In the event of the UK leaving the European Union without an agreement, the failure to adopt national(1), transitional legislative measures to ensure the continuity of markets and intermediaries in the event of a 'no-deal' has an impact on the cross-border operations of national intermediaries that, from the leave date, must stop providing investment services and activities, given that they will no longer benefit from the passport to provide their services in the United Kingdom. Likewise, British intermediaries would no longer be able to perform their activities in Italian territory using the pre-existing authorisations.

The European Securities and Markets Authority (ESMA) has warned operators on several occasionsb>(2). Lastly, with a Statement of December 19, 2018(3), the aforementioned European supervisory authority has asked intermediaries active in the provision of investment services to provide customers with information on the measures taken, or to be taken, in connection with Brexit and on the implications in their relations with these customers. Given the importance of this Statement, notice was given of its publication on the CONSOB website through a press release of December 20, 2018(4).

Given all of the above, we reiterate the need for intermediaries (banks and investment firms(5) with registered addresses in the United Kingdom) that offer investment services and activities in Italy, through branches or under the freedom to provide services, to proceed with urgency, if they have not already done so, in providing customers with appropriate information on the consequences of the changes to operating conditions following Brexit(6).

In particular, intermediaries must provide adequate information to each customer concerned, graduated according to the characteristics of the customer (retail vs professional), on the impacts of Brexit and the measures taken to ensure the orderly termination of activities.

The notices addressed to customers must be drafted using clear language to avoid causing undue alarm, while also highlighting the consequences and the measures prepared in the event of a 'hard Brexit' scenario, as well as providing adequate evidence of the impact on existing contractual relations.

In line with the aforementioned warning notice by ESMA of December 19, 2018, customers must at least be given information on:

(i) the impact of Brexit on the methods of providing services and activities by the company, on the specific service provided to the customer, as well as on the future relationship with the same customer;

(ii) the specific measures taken to achieve the orderly management of the existing relationship with the customer (including, where appropriate, the methods for terminating the relationship), as well as management of the requests for information and complaints received from customers in connection to Brexit (company contact details, any dedicated telephone number, publication of FAQs on the website, special department to deal with complaints, possibility of recourse to alternative dispute resolution, …);

(iii) the main implications of Brexit, including as a result of changes to the operations of the intermediary, on the contractual relationship with the customer, including the presumed time scale for terminating relations according to the specific service provided (administered savings vs managed savings) and contractual provisions on the advance notice required for the dissolution of the relationship.

In compliance with the contractual obligations and the rules applicable to the provision of the activities in question, each British intermediary is responsible for identifying the most appropriate channels to communicate this information, as well as the actual content of the notices to be issued. Solutions must always be adopted that enable the company to demonstrate that the customer has actually received the notice.

The information obligations described above also apply to Italian banks and investment firms (SIMs) that provide cross-border investment services and activities in the United Kingdom, with or without ancillary services, even in compliance with the relevant regulations established by the United Kingdom.

The notices described above must be drafted in the language chosen by the customer in the contract or, in the absence of such a provision, in the language used in the contract.

The information outlined above must also be published on the website of the intermediary, both in Italian and in English.

In the event of consequences that have a significant impact on the orderly termination of the provision of investment services and activities or on the rights of customers, intermediaries must notify immediately the CONSOB supervisory offices at the following certified email address:

Anna Genovese


(1)On January 24, the Ministry of Economy and Finance issued a press release on the possible exit of the United Kingdom from the European Union without an agreement, with which it informs the market of the provision of transitional measures to ensure the continuity of markets and intermediaries even in the event of a no-deal ( The arrangement of transitional measures was reaffirmed by the Presidency of the Council in February in the document 'Prepararsi al recesso senza accordo del Regno Unito dall'UE il 29 marzo 2019' ('Preparing for a no-deal exit of the United Kingdom from the EU on 29 March 2019'; /

(2) Given the importance of the issue, CONSOB has dedicated a special area of its website to Brexit, where you can also find a link to the similar area of the ESMA website.

(3) See ESMA, Reminder to firms on their MiFID obligations on disclosure of information to clients in the context of the United Kingdom withdrawing from the European Union, ESMA35-43-1328, available at _to_clients.pdf.

(4) The text of the statement in question can be found in the aforementioned Brexit area of the CONSOB website.

(5) The reference is also to operators with registered address in the United Kingdom that offer investment services and activities in Italy or that market units or shares of own or third party UCIs in Italy.

(6) To date, CONSOB has received 3 applications for authorisation and registration on the Investment Firm Register in connection to Brexit. CONSOB continues to perform its preliminary investigations with the objective of ensuring, in compliance with the relevant provisions, the initiation of operations by the intermediaries concerned.