PS19/5: Brexit Policy Statement and Transitional Directions


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)


Update: 6 September 2019

We continue to plan for a variety of Brexit outcomes. One of these outcomes is the UK leaving the EU on 31 October 2019 without an implementation period. If this happens, we must ensure there is a functioning regulatory framework in place.

We therefore need to amend our Handbook in line with the Government’s legislative changes and to reflect the UK’s new position outside the EU. Similarly, we will need to amend binding EU technical standards (BTS) for which we will gain responsibility.

We have previously consulted on Brexit-related Handbook and BTS changes. Today, we are consulting on further minor or consequential changes.

The proposals include Handbook and BTS changes relating to binary options and contracts for difference, and the Prospectus Regulation. We are also consulting on changes to Handbook provisions and new BTS in relation to the Securities Financing Transactions Regulation (SFTR).

We are also proposing to update certain provisions that we consulted on previously to reflect final rules on the Senior Managers & Certification Regime (SM&CR), and applying rules for overdrafts and buy now pay later offers to firms subject to the temporary permissions regime (TPR) in the UK.

In addition, we are proposing certain Handbook changes to take into account the Treasury’s changes to the domestic legislation implementing the European Markets Infrastructure Regulation (EMIR). Further, we are proposing to modify the periodic fee rules for Recognised Overseas Investment Exchanges (ROIEs) that are also European Economic Area (EEA) market operators.

Next steps

The consultation closes on 4 October 2019. Please send comments via the online response form. Responses will be shared with the Bank of England/Prudential Regulation Authority and HM Treasury.

Update: 25 July 2019

To reflect the extension of the Article 50 period to 31 October 2019 (‘exit day’), we intend to extend the proposed duration of the directions issued under the temporary transitional power from 30 June 2020 to 31 December 2020. This date is aligned with the end date intended by the Bank of England and the Prudential Regulation Authority (PRA).

Our position otherwise remains unchanged. We intend to use this power to ensure that firms and other regulated entities do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit.

We would like to remind firms that there are specific areas where we will not be granting transitional relief. In these areas, we continue to expect firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by exit day. Firms should use the additional time between now and the end of October to prepare to meet these obligations. If firms are not ready to meet these obligations in full, we will expect to see evidence of why this was not possible.

We will publish more information before exit day on how firms should comply with post-exit rules. We are coordinating our approach with the Bank of England and the PRA.

Update: 18 April 2019

We published the majority of our instruments on 29 March 2019. A small sub-set of FCA BTS instruments were made after 29 March and were published on 18 April 2019, including some where the PRA is the lead authority.

We may publish a further set of TTP directions later in the year.

Update: 29 March 2019

We have now published the majority of our final Handbook and BTS instruments. These can be found on our Handbook website.

Many of the amendments in the instruments are made under regulation 3 of the Financial Regulators’ Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018. As required under those regulations, we have sought and received the Treasury’s approval to make these instruments.

The final instruments are unchanged from the near-final versions except for minor amendments, including updating references to SIs. The most significant of these is that the commencement date for the instruments is now linked to ‘exit day’ as specified under the European Union (Withdrawal) Act 2018.  

The final instruments include those relating to the temporary permissions regime and the Financial Services Contracts Regime. The temporary permissions regime instrument includes guidance on disclosure of information by incoming EEA-based firms about the impact of Brexit for investor compensation scheme cover in the firm’s home state.

We have also published our finalised guides on:

We have also updated our Transitional Directions.

A small number of BTS are not included as they must be made by the Prudential Regulation Authority first. Additionally, one Handbook instrument has not been made – Exiting the European Union: SMCR and APR (Amendments) (Solo-Regulated Firms) Instrument 2019. This instrument requires the Government to pass SM&CR-related legislation before our Board can make it in final form.

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 may publish a further set of TTP directions later in the year 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

Under the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 the Treasury has granted 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 will apply only in a scenario in which the UK leaves the EU without an implementation period.

We will publish a further set of final directions closer to exit day.