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NotThamesWater
Here is a relatively small issue that affcts the work that I do in the insurance and reinsurance industry.
There are 500 insurers authorised by the Prudential Regulation Authority (PRA) and another 700 passported into the UK from the EU/EEA.
When the UK leaves the EU in February 2019, those 700 EU insurers will have to have taken action. They cannot just sit in the EU and ignore the situation. If they continue "to carry on insurance business" in the UK they will be acting illegally and subject to criminal sanctions.
They must either pull out or become regulated. Pulling out is not an option. Even if they ceased to underwrite today, very few classes of insurance business have no "tail" of claims. Some liability classes have claims tails that can last decades. They need to manage the run off of their business in a regulated manner.
To do this they must become authorised by the PRA. Before taking this step they will need to establish a subsidiary here. A branch office, although simpler, would entail a severe regulatory punishment in that it would require the company to carry twice the solvency margin that it would otherwise need thus making the operation a grossly inefficient use of capital.
Once a subsidiary is established, the PRA must approve it. This usually takes between two and a half and three years. Success is not guaranteed. The PRA has authorised three new insurers in the past four years. It would be looking to authorise 700 in the next 18 months. The government has said that the PRA must reduce its budget by 6% over the next four years. No new staff.
Once one has established a new authorised subsidiary, the next stage is to transfer the UK business from the parent to the subsidiary through a statutory portfolio transfer (Part VII Transfer). These can only be done within the EU/EEA. They will not be possible if not completed by the end of February 2019.
The new Solvency II regulatory regime came in in January 2016. This gave rise to a high demand for corporate restructuring to maximise solvency efficiency. The PRA informed the market that if applications were not made by January 2015, they would not be entertained before January 2016. The PRA is facing cuts. The Solvency II issue applied only to a proprtion fo the 500 UK authorised companies. The current issue affects 700 compamies.
Of course UK companies are also reorganising and establishing EU hubs. This has been simpler in that they are dealing with less pressed regimes in a variety of different companies. The Irish FSA has added 150 staff to thier team. Malta is gearing up. They will however need PRA consent for Part VII transfers out of their UK regulated companies.
In other words. In one relatively small area of one industry we have a clusterfuck. There are many other industries equally affected.