Banks See Brexit Headaches Compounded by EU Data-Protection LawBy
Banks already face a slew of threats from Brexit. Come May 25, they’ll have one more thing to worry about, when sweeping new European Union data-protection rules kick in.
A major financial-industry lobby called on Thursday for urgent action by policy makers to answer the question of how data will flow across the Channel after Brexit. The reliable flow of data on millions of customers and transactions has emerged as a major issue as the date of the U.K.’s withdrawal from the EU approaches.
The Bank of England has been warning for months about the potential impact of Brexit on derivatives and insurance contracts, clearing services, cross-border delegation of asset management and personal data. The picture gets a lot more complicated next month when an EU law known as the General Data Protection Regulation goes live, with the goal of protecting people’s data from attack and misuse in the age of hacking and cybercrime.
“It is essential that there is clarity as to the ability for businesses, including banking and investment firms, to continue to transfer personal data between the EU and U.K. post-Brexit,” the Association for Financial Markets in Europe said in a report. The group’s members include Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG.
AFME said data standards will be essentially identical upon the U.K.’s departure because GDPR will be in place on both sides of the Brexit divide. The regulation allows data from within the EU to be transferred to a foreign country when the bloc has decided that jurisdiction has an adequate level of protection for information.
The so-called adequacy decision process threatens to become another political football between the two sides similar to the EU’s plan to assess the equivalency of Britain’s oversight of financial markets before granting U.K. firms access to the single market.
AFME said discussions to prepare for adequacy decisions should begin immediately, and both sides should commit to a “transitional solution” while the necessary assessments are made.