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FCA continues Brexit preparations with further consultation

The UK’s Financial Conduct Authority (FCA) has published a further consultation on Brexit, preparing for the possibility of the UK leaving the EU without an implementation period.27 Nov 2018

The consultation was published on Friday, before the European Council announced it had endorsed the Brexit withdrawal agreement reached between the EU and UK last week, and approved the political declaration on their future relationship.

The latest consultation (986 page / 13.8MB PDF) focuses on a range of amendments to the FCA Handbook and the binding technical standards derived from EU regulation.  Notably the FCA is consulting on aspects of its proposals regarding the temporary permissions regime (TPR), non-Handbook guidance, Handbook forms and to reflect its enforcement powers in respect of the credit rating agencies and trade repositories it would supervise under the proposed new legislation.

The FCA document follows the publication of statutory instruments by the UK government, so regulators will be able to amend provisions derived from EU legislation in order that they function effectively after exit day on 29 March 2019 if there is no implementation period.

FCA executive director of international Nausicaa Delfas said: "The FCA is preparing for a range of scenarios. We have published further proposals to prepare for the possibility the UK leaves the EU in March 2019 without an implementation period."

"Our aim is to provide certainty and confidence for firms operating in the UK. These proposals will ensure we have a robust regulatory regime from day one, and a smooth transition for European Economic Area (EEA) firms and funds currently passporting into the UK," said Delfas.

Areas covered in the latest consultation include the FCA's proposals for how the Senior Managers & Certification Regime would apply to branches of EEA financial services firms in the UK while they have a temporary permission for their UK activities and on leaving the TPR when fully authorised.

According to the FCA in its consultation, its "baseline approach" is to treat EEA member states the same as any other third country - unless there is reason to depart from doing so. For example, the FCA is proposing the new Handbook definition of 'UCITS' will include both UK and EEA UCITS (Undertakings in Collective Investments in Transferable Securities). The FCA said this meant it would be treating EEA UCITS differently to any other third country investment fund, but due to the volume of EEA UCITS that would otherwise be impacted, maintaining the status quo means disruption is avoided.

The consultation, which is largely technical, follows an earlier, similar consultation in October.