FCA Provides Information for Firms During Brexit Transition Period

The UK leaves the European Union (EU) on 31 January. The country will enter into a transition period which will last until 31 December 2020. According to FCA, during the Brexit transition period, EU law will continue to apply.

30 January, 2020 | AtoZ Markets – The Financial Conduct Authority, FCA sought to reassure the financial sector ahead of UK exit from the European Union. Andrew Bailey, CEO of the FCA, said that the financial industries was one of the best-prepared sectors for Brexit’s possible outcomes”. The FCA has always maintained a non-political stance on Brexit.

Mr. Bailey stated last month that the regulator had completed all its preparation for the departure of the UK. It was not “easy” to prepare for Brexit together with other business priorities. But it was one of the achievements of the FCA in 2019. Last week, he said:

 I have many hopes and goals for the FCA in 2020. First of all, we must continue to take care of what Brexit throws us. Moreover, I believe that FCA has done an excellent job so far on Brexit.

The UK will leave the EU at 23:00 GMT on 31 January and immediately enter into an 11-month implementation/transition period. The Brexit transition period will last until 31 December 2020. Mr. Bailey said:

The implementation period offers businesses a period of certainty as negotiations continue on our future relationship with the EU.

During this period, EU law will continue to apply. Businesses and funds will continue to benefit from passporting between the UK and the EEA. Consumer rights and the protections deriving from EU law will also remain in force.

There will be no changes to the reporting obligations for companies, including those for reporting MiFIR transactions, under EMIR, and for CRAs. It will continue in line with the current regulatory requirements of the EU. The FCA urged companies to act in preparation for the end of the Brexit transition period in December to minimize risks to customers. Andrew Bailey said:

The FCA plans to use this time to work with the government, the Bank of England, businesses and other regulators. We have to ensure that the financial services sector is ready for the end of 2020.

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EEA companies have to notify FCA if they want to use the Temporary Permissions Regime (TPR). Fund managers also have to notify FCA if they want to continue marketing in the UK under the Temporary Marketing Permissions Regime (TMPR). The windows to notify FCA will close on 30 January.

The TPR will allow EEA-based companies to continue new and existing regulated activities in the UK under their current UK authorizations for a limited period. TMPR will also allow EEA-domiciled investment funds that market in the UK with a passport to continue temporarily marketing in the UK.

After exiting, those companies will be contacted and provided with a landing slot when they need to submit their full UK authorization application. Once authorization has been obtained, the FCA will generally expect companies to have a physical presence in the UK to ensure effective supervision.

Companies and fund managers who have already submitted a notification need not take further action at this stage. We will confirm our plans to reopen the notification window later this year. It will allow businesses and fund managers to make further notifications before the end of the implementation period.

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