Loan Market Association highlights passporting issues for UK lenders and importance of transitional arrangements
The Loan Market Association has responded to the UK Treasury Committee's Call for Evidence on EU Exit and Transitional Arrangements. The response highlights the concerns of UK regulated lenders at losing the benefit of CRD cross-border licensing to lend in other EU member states under the regulation of their home state; and the need for transitional provisions to preserve the authorisation of existing loans outstanding at the time licensing may be lost.
Commenting on the Call for Evidence on EU Exit and Transitional Arrangements, Nicholas Voisey, LMA Managing Director, said:
"A sudden withdrawal of passporting rights could affect both the enforceability of existing loan agreements and the ability and willingness by lenders based in the UK an EU-27 to enter into future agreements. Transitional arrangements are required to avoid these damaging effects. In the absence of such a commitment, lenders based in the UK and EU-27 may start withdrawing lending activity, as well as existing agreements being affected, prior to the EU exit.
The transitional arrangement should be as broad as possible to ensure that the fullest range of rights and obligations remain available for discussion as part of the future UK-EU agreement. This should include the continuing right for UK banks and non-banks to make and own loans to EU27 entities. Loans originated or acquired by passported firms at a time when those firms were validly authorised should also not be affected by the termination of the rights of those firms."