The Financial Conduct Authority (FCA) has published Policy Statement 19/5 on Brexit with near-final Handbook instruments and Binding Technical Standards (BTS) instruments and Transitional Directions.
The PS19/5 feedbacks on a series of consultations since October 2018 to ensure a functioning regulatory framework for financial services if the event of a no-deal Brexit. The transitional directions detail the use of Temporary Transitional Power (TTP) which aims to mitigate disruption caused by EU exit-related changes to firms’ obligations.
The PS19/5 feedbacks on consultations including the proposed changes to the Handbook and BTS (CP18/28 and (CP18/36), a temporary permissions regime for inbound firms and funds (CP18/29), Brexit and contractual continuity (CP19/2) and regulatory fees and levies (CP18/34). The policy statement sets out the responses regarding:
Amendments to the FCA’s Handbook and BTS to correct deficiencies.
- Establishment of 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
- Establishment of regulatory regimes for credit rating agencies (CRA), trade repositories (TR) and securitisation repositories (SR)
- Provide guidance on EU Level 3 material, guidance that sits outside our Handbook (non-Handbook guidance) and guidance of using the FCA forms
The two Directions, Transition Direction and Prudential Transitional Direction, set out the use of TTP which is granted by the Treasury under the draft regulations of Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019. These directions give regulated individualstime to adapt the changes to UK financial services regulation. Continuity is generally achieved by the application of ‘standstill’, which means 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. The direction shall come into force on exit day and shall apply until 30th June 2020, unless otherwise stated.
The instruments are in near-final form to help stakeholders understand the expected changes, however, the FCA warns that further changes might be made since the instruments have to be approved by the Treasury. The final instruments will be published on 28th March 2019 if the withdrawal agreement between the UK and the EU is not ratified.
To read more, please follow these links:
PS19/5 Brexit Policy Statement
Brexit – what we expect firms and other regulated persons to do now
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Please Note: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions