PS19/5: Brexit Policy Statement and Transitional Directions

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In this paper, we respond to the feedback we received to our Brexit consultations, publish near-final rules and Binding Technical Standards (BTS). We also set out more detail of how we intend to use the Temporary Transitional Power.

Read PS19/5 (PDF 2.64MB)

Instruments


Since October 2018, we have published a series of consultations to ensure a functioning regulatory framework for financial services if the UK leaves the EU without a withdrawal deal or implementation period (a no-deal scenario). We also issued public statements on our proposed use of the temporary transitional power (TTP) delegated to us by the Government and on the treatment of Gibraltar-based firms under our Handbook after Brexit.

This Policy Statement (PS) sets out our responses to the feedback we have received on our proposals to:

  • amend our Handbook and BTS - read Chapters 4,5,6 and 8
  • establish a temporary permissions regime (TPR) for European Economic Area (EEA) entities operating in the UK and a financial services contracts regime (FSCR) for those EEA entities seeking to service existing business, but not undertake new business, in the UK after Brexit – read Chapter 7
  • establish regulatory regimes for credit-rating agencies, trade repositories and securitisation repositories – read Chapter 9
  • provide guidance on our approach to EU Level 3 material – read Chapter 10
  • provide guidance on our approach to guidance that sits outside our Handbook (non-Handbook guidance) – read Chapter 10
  • provide guidance to the use of our forms – read Chapter 10

Who this applies to

Given the breadth of expected changes set out in this PS, we expect many of our stakeholders to be affected. In Annex 2 we list which stakeholders we anticipate are affected by the specific changes to our Handbook and BTS.

Next steps

We will publish the final instruments on 28 March 2019 if the withdrawal agreement between the UK and the EU is not ratified.


Consultation Papers

This PS contains responses to these Consultation Papers (CPs):

  • 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)

Temporary transitional power

The Treasury has laid draft regulations in Parliament (Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019) which would grant us powers to make transitional directions to mitigate disruption caused by EU exit-related changes to firms’ obligations. 

These directions give regulated persons time to adapt to changes to UK financial services regulation caused by Brexit. Continuity is generally achieved by applying a ‘standstill’, so firms may continue to comply with the pre-exit version of an obligation. In addition, temporary permission firms are allowed substituted compliance for home state obligations.

Read the directions:

  • Transitional Direction (PDF)
  • Prudential Transitional Direction (PDF)
  • Annex A (PDF) – application of the ‘standstill’ in the Transitional Direction​​​​​​ to amendments made in Statutory Instruments and Exit Instruments amending technical standards
  • Annex B (PDF) – application of the ‘standstill’ in the Transitional Direction ​​​​​​to amendments made in the FCA Handbook 

We have also published an accompanying explanatory note (PDF) for these directions.

In some cases, firms must comply with post-exit obligations, where we consider it important for our objectives. We set out our approach in our February statement.

These directions are in near-final form. In a no-deal scenario, we will make these directions final for exit day.

The PRA has also published near-final transitional directions. Firms may find helpful the guidance material produced by the PRA to the extent that it is relevant, for example, guidance on the UK CRR.