In these FAQs, we set out what Brexit means for Aviva Investors and our clients.
1. Has a dedicated team dealing with Brexit-related issues been established at Aviva Investors?
The Government has agreed to a transition period with the European Union that will last until the end of 2020. During this time, all EU laws, rules and regulations will continue to apply in the UK and between the UK and the EU. We will continue to monitor the situation during the transition period as the UK’s relationship with the EU becomes clearer.
A project team was established after the referendum, which includes representation from all business areas and all our EU entities. The project team has prepared contingency plans, which will be implemented before the end of the transition period.
2. What is the operational impact of Brexit on Aviva Investors?
We have considered how leaving the EU will impact our operating model. We are comfortable that only minor changes to existing organisational structures are required, and continue to review the situation to understand if any further adjustments may be required following the end of the transition period.
Given the work being undertaken by the Financial Conduct Authority (FCA) and HM Treasury to minimise market and operational disruption, we do not expect any impact on our UK fund range.
Our business also operates cross-border, using a variety of fund structures to meet the requirements of clients in different geographies. For several years, we have been able to serve European clients effectively through our Luxembourg entity and SICAV fund range, as well as our sizable presence in Ireland and France.
3. How will Brexit impact Aviva Investors’ ability to source investment opportunities in Europe?
We continue to monitor events and financial markets closely and the risks and opportunities presented by them. Regular stress testing of funds against various scenarios is a core part of our daily investment and risk management process and helps us make informed decisions to protect client portfolios.
The asset management business is global, and Brexit will not impact our ability to continue to source investment opportunities for clients throughout Europe and beyond.
4. How is Aviva Investors preparing for a ‘Hard’ or ‘No Deal’ Brexit
Although a deal was reached allowing the UK to leave the EU with a transition period, we continue to monitor the situation in the run up to the end of December 2020 as the UK’s future relationship with the EU becomes clearer.
Following recent announcements by the European Securities and Markets Authority (ESMA), the European Commission and other European regulatory bodies on co-operation agreements, we believe we will continue to be able to outsource or delegate portfolio management activities from the EU back to the UK after Brexit. This will allow us to continue to make use of the expertise we have in the UK. (Please also refer to Question 5)
5. What is your position on delegation of portfolio management?
The ability to delegate investment and risk management activities is important to business models across the asset management industry. We believe the current, globally recognised delegation model protects clients’ interests and gives them access to the broadest range of investment opportunities and expertise.
Continued delegation after Brexit depends on co-operation agreements being in place between the UK and EU Member States’ regulatory authorities. We are encouraged that agreement has been reached between UK and EU.
We believe our current organisational structure will allow us to continue to delegate certain key activities to the UK after Brexit, while maintaining appropriate levels of governance and oversight.
6. Are you making any changes to your EU branches ahead of Brexit?
Our European branches will continue to provide investment services and activities as branches of our Luxembourg entity, and we have obtained the correct regulatory permissions. The future relationship between the UK and the EU is not yet clear and we continue to monitor the situation to ensure we adopt the optimal approach under the new agreement.
7. What will happen to EU funds marketed to UK investors?
Certain Aviva Investors funds are domiciled in Europe and currently marketed to UK investors via an EU marketing passport. The FCA has confirmed it will be implementing a temporary permissions regime to enable UK investors to have continued access to EU UCITS at the end of the transition period. Aviva Investors will make the relevant notifications for affected funds ahead of the FCA’s deadline.