UK authorities (BoE, FCA, and PRA) issued statements about their intended use of the temporary transitional power at the end of the transition period. On March 25, 2020, HM Treasury issued a written ministerial statement outlining its intention to retain the regulators’ temporary transitional power and to shift the application of this power so that it is available for use by the UK financial services regulators for a period of two years from the end of the transition period. Temporary transitional power was introduced through the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019. UK authorities intend to grant general transitional relief on a broad basis, with key exceptions as previously identified, from the end of the transition period until March 31, 2022.
In all but a few areas, PRA-regulated firms and BoE-regulated financial market infrastructures do not need to have completed preparations, to implement changes in UK law arising from the end of the transition period, by December 2020. Specific uses of the temporary transitional power, in particular those relating to some of the new requirements on firms entering the temporary permission regime, are expected to remain as previously published. Application of the temporary transitional power to changes to new EU material due to become applicable during the transition period will be considered as part of the ongoing legislative process in relation to those provisions. The draft transitional directions and guidance, the most recent of which were published in July 2019 as part of consultation paper (CP18/19) on UK withdrawal from EU, will be updated in light of the transition period and more details will be published in due course.
FCA also highlighted that UK regulated firms will not need to complete preparations to implement changes in UK law arising from the end of the transition period by December 2020. However, there are specific areas where FCA will not grant transitional relief. In these areas, FCA expects firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by the end of the transition period. FCA will publish updated draft directions and annexes in due course, which will include details on the application of the temporary transitional power in relation to new EU legislative requirements that become applicable during the transition period. Incoming European Economic Area firms should note that the temporary transitional power does not apply to the temporary permissions regime.
Keywords: Europe, UK, Banking, Insurance, Securities, Brexit, Transition Period, Transitional Direction, HM Treasury, BoE, PRA, FCA
Previous ArticleSNB on Reporting Data for COVID-19 Credit and Refinancing Facility
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.