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FCA new updates – Brexit and end of UK transition period

FCA new updates – Brexit and end of UK transition period

Background

  • On 18 November 2020, the FCA hosted a two-hour Brexit webinar to discuss what the end of the UK’s transition period on 31 December means for people and firms
  • The FCA is continuing to emphasise the urgency to get ready for a new environment
  • All future business in EU countries will need specific arrangements in place
  • The FCA discussed many wide-ranging topics with key speakers including Nausicaa Delfas (Executive Director of International), Zertasha Malik (Head of International) and Greg Sachrajda (Head of International Delivery)
  • On 9 November, HM Treasury (HMT) published a policy paper (“HM Treasury equivalence decisions for the EEA States”) in which it granted a package of equivalence decisions to the EEA States
  • Although this provides greater certainty for EEA firms wishing to continue activities in the UK, the EU has NOT yet reciprocated to confirm any equivalence for UK firms wishing to operate in EU countries
  • The UK and EU have not yet reached final agreement on any topics so some important topics may remain unresolved for UK financial services firms

Impacts

On 31 December 2020, at 11pm, the transition period will end and the UK will enter a new phase.  From that date, it will mean that EU law and the rules relating to the single market will no longer apply in the UK.

The FCA has been taking steps to prepare for all scenarios at the end of the transition period, to minimise disruption to the extent it reasonably can and has been supporting firms to do the same.

At the end of the transition period, firms will have substantially the same regulatory requirements as before leaving.  HM Treasury has onshored EU legislation and the FCA intends to use its temporary transitional power (TTP) on a broad basis to allow firms more time to adjust to most new requirements.

As passporting will end on 31 December 2020, together with HM Treasury, the FCA has put in place a series of temporary regimes such as the temporary permissions regime (TPR).  These temporary regimes will allow approximately 1,500 non-UK firms and funds to operate in the UK immediately after the transition period.

The FCA has also recently set out its approach to the share trading obligation, in the absence of mutual equivalence.  This will enable UK-based investors and asset managers to continue to have the freedom to find the best possible trading terms and to get the best outcome for themselves and their customers.

Timeline with relevant dates to be logged on regulatory calendar

  • Firms need to be ready for new operating conditions from 1 January 2021

Next steps

The FCA asks all firms to proactively prepare fully and to refer to its Brexit webpages.

If anyone has specific questions or needs any advice, contact our specialists.