PRA and FCA letters to UK banks and insurers – prepare for end of EU transition period

PRA and FCA letters to UK banks and insurers – prepare for end of EU transition period

Background

• During October, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have jointly written to the CEOs of all UK and international banks (on 9 October 2020) and to the CEOs of insurance firms (on 21 October 2020).
• The PRA and FCA have emphasised once again the importance of being prepared for the end of the transition period in order to minimise disruption and ensure market stability.
• The PRA and FCA have suggested that other firms in other financial services sectors may also find it useful to consider these letters as well as statements from other regulatory bodies (the FPC, EIOPA, EBA and ESMA) to help them prepare for the end of the transition period.
• https://www.bankofengland.co.uk/prudential-regulation/letter/2020/final-preparations-for-the-end-of-the-transition-period
• https://www.bankofengland.co.uk/prudential-regulation/letter/2020/final-preparations-for-the-end-of-the-transition-period-insurance-firms
• The PRA and FCA recommend that firms should read the FCA’s Brexit pages including how to prepare for Brexit and the guidance relevant to UK firms and their specific sector. The FCA will keep this guidance up to date.

Impacts

UK authorities have put temporary measures in place to ensure that UK households and businesses will be able to continue accessing services from EU financial institutions after the end of 2020.   These measures include the temporary permissions regime (TPR) and the use of the Temporary Transitional Power (TTP).

However, some volatility and disruption to financial services, particularly to EEA-based clients and customers, could arise.   UK firms are continuing to plan and prepare as well as engage with clients and customers to minimise any disruption and it is important that they continue to do so.

Final steps by individual firms are required to ensure their preparedness for the end of the transition period.   The PRA and FCA expect firms to address the risks they may face.

Timeline with relevant dates to be logged on regulatory calendar

• All firms need to be ready for many new business conditions from 1 January 2021

Next steps

If firms have any questions about the expectations of the PRA and FCA, they should raise these through their usual supervisory channels.   If firms do not have a named FCA supervisor, they can call the FCA’s dedicated Brexit telephone line on 0800 048 4255.

If anyone has specific questions or a need for direct help, contact our experts too.