CONSOB calls for more actions by banks and investment firms in their Brexit-related communication to customers

In view of Brexit approaching, CONSOB has called on intermediaries to inform their customers about the consequences for existing contractual relationships.

In a warning [link here] published yesterday on its website, CONSOB (the Italian public authority responsible for regulating the Italian financial markets) requests banks and investment firms that are based in the UK and currently provide services in Italy (either via branches or under the freedom to provide services), to communicate effectively to their Italian customers on how they may be affected by the UK withdrawal. Indeed, the warning reiterates that, in the event of a "no deal" and in the absence of any transitional measure taken by the Italian authorities, these intermediaries would be prevented to operate in Italy on the basis of the existing passports. The warning is addressed also to UK based asset managers providing investment services and activities in Italy or marketing therein shares and units of investment funds.

Likewise, CONSOB has requested Italian banks and investment firms operating in the UK to provide similar information to their UK customers, also taking into account the UK framework in this respect. 

The warning draws from the one published by ESMA last 19 December (setting out the MiFID obligations on disclosure of information to customers in the context of Brexit) and follows a similar statement published by the Bank of Italy on 19 February 2019.

In particular, CONSOB has called on these intermediaries, in case they have not done it already, to promptly:

  • notify their customers with detailed personalized information about the specific implications arising from Brexit and the initiatives adopted by the relevant intermediary including any measure to ensure an orderly termination of the activities, if relevant; and
  • publish the same information on their website, at least in Italian and English language. 

Intermediaries are free to draft the notice as they wish and may tailor it according to the MiFID classification of the recipient (by applying a “proportionality” principle). 

However, the information – to be provided in clear and plain language, avoiding any reference which might cause undue alarm – must cover at least the following areas: 

  1. the implications Brexit has with regard to the way the firm provides its services to the customer;
  2. the measures adopted to orderly manage the customer relation (including, if relevant, how this will be terminated) and to deal with any request for information or complaint received by the customer in relation to Brexit;
  3. the effects on existing contracts, including where relevant the timing for their termination. 

Considering that consequences on customers would change depending on whether the Italian authorities will put in place transitional measures (see the statement issued on 24 January by the Italian Ministry of Finance, described here [link here]), it is reasonable to expect that the notice may address both scenarios as alternative scenarios, provided that it is drafted in a way that is comprehensible for customers.

Finally, the intermediaries have been requested to promptly inform CONSOB, using the dedicated email addresses, should material impacts be expected with regard to the orderly termination of the activities and/or the customers’ rights.