The Financial Conduct Authority (FCA) has welcomed the agreement reached on the terms of an implementation – or transitional – period that will apply following the UK’s withdrawal from the European Union.
Under the terms of the agreement, the implementation period will operate from 29 March 2019 until the end of December 2020, during which time European Union law will remain applicable in the United Kingdom. Firms and funds will continue to benefit from passporting between the UK and EEA during the implementation period. Obligations derived from EU law will continue to apply and firms must continue with implementation plans for EU legislation that is still to come into effect before the end of December 2020. Consumer rights and protections derived from EU law will also continue to apply.
The implementation period forms part of the withdrawal agreement, which is subject to further negotiations between the UK and EU before it is finalised. The FCA says it will monitor developments and provide updates as necessary.
In light of the agreement on the terms of an implementation period and HM Government’s commitment to providing for a Temporary Permission Regime as a backstop, firms and funds currently benefiting from an EU passport need not apply for authorisation at this stage.
In December 2017, the Government announced its plan to legislate for a Temporary Permission Regime if necessary. This would enable relevant passporting firms and funds to undertake new business that falls within the scope of their existing permissions, enable them to continue performing their contractual rights and obligations, manage existing business and mitigate risks associated with a sudden loss of permission.
Subject to HM Government’s legislation setting up the regime, our expectation is that firms and funds that will be solo-regulated by the FCA will need to notify us of their desire to benefit from the regime. Notification will not require submission of an application for authorisation. We will set out further details on these proposals later in the year.
On 9 March 2018, the FCA launched a survey to collect information from EEA firms and funds who would like to participate in the regime and the FCA would encourage firms to complete this.
The EU (Withdrawal) Bill will repeal the European Communities Act 1972, and convert existing EU law at the point of exit into UK law. The Bill gives powers to Ministers to bring forward secondary legislation to amend this retained EU law to ensure that it functions effectively once the UK is no longer a member of the EU.
The FCA says: “The FCA continues to work with HM Treasury and the Bank of England/PRA to ensure the UK’s legal and regulatory framework functions on EU withdrawal in any scenario. This includes ensuring that the FCA Handbook functions effectively when the UK is no longer a member of the EU. We will set out further details in due course.
“The implementation period will permit firms and funds to continue to benefit from passporting between the UK and EEA until the end of December 2020. UK firms and funds passporting into the EEA should discuss with their relevant EU regulator the implications of a transitional period for their contingency planning. The FCA will continue to cooperate closely with the home state regulators of EEA firms and the European Supervisory Authorities, and we stand ready to work with them to address any risks to consumer protection and financial stability.”
