​Security of periodical payments with Gibraltar-based insurers

In light of the contents of the Judgment in Young -v- Acromas, I have continued to press for this issue to be materially dealt with prior to the end of the year, consulting with both the Ministry of Justice (MoJ) and the Financial Services Compensation Scheme (FSCS).

I have this morning received the following email from the MoJ:

My apologies for the delay in replying to your query – I have been waiting to hear from HM Treasury. They have now provided the following:

As you are aware, until the end of the Transition Period, the UK and Gibraltar will continue to enjoy reciprocal access to each other’s markets through a passporting regime similar to that available to EU firms. The Government made the Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019 to protect Gibraltar-based firms accessing the UK market from suddenly losing their access rights as a result of EU exit, including their status as ‘relevant persons’ for FSCS purposes.

You are correct in noting that the preservation of market access rights under the Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019 will terminate at the end of 31 December 2020. Under regulation 12, HM Treasury may by regulations extend such market access rights by 12 months on each occasion.

HM Treasury is fully committed to bringing legislation forward before the end of the year to extend the effect of the temporary arrangements. The extension of the relevant Parts of the Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019 will temporarily enable Gibraltar-based firms to continue operating in the UK and protect their status as FSCS’s relevant persons beyond the end of 2020. Looking to the long term, a permanent market access regime has been put forward as part of the Financial Services Bill introduced to Parliament on 21 October 2020. The temporary arrangements will remain in place until the new permanent market access arrangements are delivered, in order to avoid disruption for Gibraltar-based firms and UK consumers. Further information on the Financial Services Bill is available here and here.

Whilst the legislation to extend the temporary arrangements has yet to be laid, it is good to see that there is a firm commitment to ensure that claimants who currently receive periodical payments from Gibraltar-based insurers will continue to benefit from unlimited, 100% protection under the FSCS.

I will continue to press regarding the non-Gibraltar-based, EEA passported-in insurers, as presently continuing protection seems to rely on the insurer’s participation in the Temporary Permissions Regime (TPR) or the Financial Services Contracts Regime (FSCR). Unfortunately, there seems to be no list of insurers who will be covered under these Regimes, meaning that the claimant might not know that FSCS protection is being withdrawn until it has happened (i.e. on the 1^st January 2021).