The Financial Conduct Authority (FCA) has published near-final rules and guidance that will apply in the event the UK leaves the EU without an implementation period. As most of the changes proposed will be made under powers given to the FCA under the EU (Withdrawal) Act, they are subject to approval by the Treasury.
As the UK prepares to leave the EU, the FCA has been working to deliver a transition that is as smooth as possible. The documents published today confirm the FCA’s proposals in the event of a no-deal Brexit and bring together feedback from a number of consultation papers.
The papers also provide further details on the treatment of Gibraltar-based firms after Brexit and the temporary transition power. This power would give the FCA the ability to waive or modify changes to regulatory requirements which have been amended under the EU (Withdrawal) Act. We intend to use it so firms and other regulated entities do not generally need to prepare now to meet new UK regulatory obligations. In most cases, we plan to allow firms a period of 15 months to adapt to these changes. We have also set out the areas where firms need to prepare to comply now on our website.
Nausicaa Delfas, Executive Director of International at the FCA said:
“The FCA has been preparing for a range of scenarios, including the possibility that the UK leaves the EU in March 2019 without an implementation period. The documents published today are a significant milestone in this work: they ensure that there is a functioning regulatory regime from day one, and that firms are clear as to the requirements they need to meet by end March 2019 and beyond, so they can continue to meet the needs of their customers.”
Earlier this week, the FCA published information for regulated firms in different sectors to consider if or how they will be affected by Brexit and what action they may need to take. This includes information specific to the banking sector, UK‑based pensions and retirement income firms, general insurance firms, retail firms, wholesale banks, markets and asset managers operating in the UK.
Notes to editors
- Policy Statement: PS19/5: Brexit Policy Statement.
- This Policy Statement contains responses to these Consultation Papers:
- CP18/28 and CP18/36 on proposed changes to the Handbook and BTS
- CP18/29 on a temporary permissions regime for inbound firms and funds
- CP19/2 on Brexit and contractual continuity
- CP18/34 on regulatory fees and levies (regarding question 10 on firms in the temporary permissions regime contributing to the devolved authorities’ debt advice levy)
- Statutory Instrument: The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019.
- On 25 October 2018, the UK Parliament approved legislation (PDF) delegating power to regulators to address deficiencies arising from the UK’s withdrawal from the EU. Under this legislation, the Treasury must approve changes made by the FCA. We have set out our role in preparing for Brexit and how we are working with the Treasury on our website.
- On 6 November 2018, the UK Parliament approved legislation setting out the temporary permissions regime for passporting firms under Schedules 3 and treaty firms under schedule 4 to FSMA. Parliament has also approved legislation providing similar schemes for institutions passporting under the Electronic Money Directive or Payment Services Directive 2. Under the legislation relevant firms which notify before UK withdrawal of their wish to continue to do business in the UK, will be deemed to have temporary UK authorisation. A similar regime will apply to the UK recognition of investment funds.
- Firms can find out if they use a passport by checking the Financial Services Register.
- We intend to preserve the existing regulatory treatment within our Handbook in relation to Gibraltar and Gibraltar-based firms. This is in line with our statement published 20 December 2018.
- The FCA has set out its approach to transition regimes, alongside the temporary permissions regime:
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.