We’re into March – Brexit is (as of today, at least) happening this month.
With this in mind, the Financial Conduct Authority is ramping up its preparations. This week, the regulator published two new updates on how firms should plan for the UK’s departure from the EU.
New FCA guidance on Brexit preparedness
On 27 February, the regulator published updated guidance to support firms in finalising their preparations.
Specific guidelines for different sectors
The guidance comprises specific updates for firms operating in the following sectors. More detailed advice for each sector is available at each of the links:
- banking and payments
- life insurance, pensions and retirement income
- general insurance
- retail investment
- wholesale banks, markets and asset managers
For all of these areas, a key focus of the guidance is the need for the financial services industry to carry on business in a compliant way if we leave without a deal.
Many firms carry out business in the European Economic Area. If we leave with no deal on 29 March, firms will need to consider whether and how they can maintain this business, and how they can minimise disruption for EEA-based customers.
Communicating with customers
The regulator takes the opportunity to remind businesses to ‘consider what information needs to be communicated to their customers, and how this will be done in a way that is clear, fair and not misleading’.
Cross-border data sharing is something that might be impacted by the UK’s departure from the EU. The GDPR is an EU regulation, and the potential loss of passporting will affect the way client data is shared with different countries.
Follow the FCA's rules whatever the shape of Brexit
Commenting on the updated guidance, the regulator’s Nausicaa Delfas reiterated that ‘firms should consider the impact of all scenarios on their business, and on their customers. As a guiding principle, we expect firms to adhere to our regulatory standards throughout’.
If you want more information, this is available from the Authority’s webpage on preparing your firm for Brexit.
What happens if we leave without a deal?
The regulator has also confirmed its proposals for a no-deal Brexit.
On 28 February, it published near-final rules and guidance that will apply in the event the UK leaves the EU without an implementation period.
The proposed changes are still subject to approval by the Treasury, as most will be made under powers given to the FCA under the EU (Withdrawal) Act.
The proposals are based on feedback from a number of consultations the regulator has held. Two consultation papers were published by the Authority in October, with another launched in November and two more published on 8 January.
As well as focusing on a no-deal scenario, the new papers provide further details on the treatment of Gibraltar-based firms after Brexit, and on the temporary transition power.
This power would give the FCA the ability to waive or modify changes to regulatory requirements which have been amended under the EU (Withdrawal) Act.
Its aim is to allow firms and other regulated entities a period of 15 months to adapt to new UK regulatory obligations that replace outgoing EU ones.
You can read the full FCA guidance on preparation for a potential no-deal scenario on the regulator’s website.
Business as usual while preparing for change
While the Brexit outcome is as-yet unclear, the regulator has stressed that continuing to meet FCA requirements will be central to remaining compliant.
If you want a refresher on FCA financial promotions compliance, you can download a copy of our Compliance Guide to Financial Promotions. Published in conjunction with Compliance expert, Lee Werrell, it contains first-hand insights, tips and advice on the regulatory requirements for financial promotions, and ways to ensure compliance.
You can download a free copy from our resource library.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.