Today (31 January), the UK officially leaves the European Union. In light of this, the Financial Conduct Authority has issued updated information for the firms it regulates, on issues they need to consider during the implementation period.
The implementation period is due to last until 31 December 2020, and during that time, EU law will continue to apply.
What does this mean for financial services firms?
- Firms and funds will continue to benefit from passporting between the UK and EEA.
- Consumer rights and protections derived from EU law will remain in place.
- As a result, there will be no changes to the reporting obligations for firms, including those for MiFIR (Markets in Financial Instruments Regulation) transaction reporting, under EMIR (European Market Infrastructure Regulation), and for CRAs (Credit Rating Agencies); these will all continue in line with existing EU regulatory requirements.
The window for EEA firms to tell the FCA that they wanted to use the Temporary Permissions Regime (TPR), or for fund managers to notify the regulator of any funds they wanted to continue to market in the UK under the Temporary Marketing Permissions Regime (TMPR), closed yesterday (30 January).
Any firms or fund managers that had already submitted a notification need take no further action at this stage. The FCA plans to reopen the notification window later this year; this will allow additional notifications to be made by firms and fund managers before the end of the implementation period.
What should firms do now?
As confirmed by the FCA, there is little for firms to do immediately in response to Brexit. As Andrew Bailey, the Authority’s Chief Executive, said when confirming the transition arrangements, ‘The implementation period gives firms a period of certainty while negotiations are continuing on our future relationship with the EU’.
There will, though, be work for firms to do to ready themselves for the end of the year.
In its announcement, the regulator advises all financial services firms to ‘consider how Brexit will impact their business and what action they need to take to be ready for 1 January 2021 to minimise risks to customers’.
Some of our previous blogs have some good background here. In September, we asked how prepared the financial services industry was for Brexit. If you feel you have more to do to plan, you might want to read the FCA’s final instruments and guidance for a no-deal Brexit and the draft directions under its Temporary Transitional Power.
The regulator will continue to provide regular updates on its Brexit webpages. Any firms wanting more information can also call the FCA Brexit information line (0800 048 4255) for answers to their questions.
Keep abreast of the latest compliance regulations, terminology and jargon
Compliance professionals are used to ever-shifting regulatory goalposts. The changes that Brexit will ultimately bring are just one aspect of this…you need to keep pace in order to act as a trusted partner to your firm on issues of compliance and governance.
To give Compliance Managers an easy reference for all things relating to regulatory compliance terminology, we have produced a Financial Compliance Glossary.
The glossary defines some of the most frequently-used words and phrases in UK financial compliance and is an invaluable reference. 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.