FCA Issues Brexit Related Policy Statement and Transitional Directions
FCA published a policy statement (PS19/5) that sets out its responses to the feedback received on proposed changes to the FCA Handbook and Binding Technical Standards (CP18/28 and CP18/36), temporary permissions regime for inbound firms and funds (CP18/29), Brexit and contractual continuity (CP19/2), and regulatory fees and levies (CP18/34). Additionally, FCA has issued transitional directions and prudential transitional direction with respect to its approach to use the temporary transitional power.
FCA had received 92 responses to the consultation papers—CP18/28, CP18/29, CP18/36, and CP19/2. Annex 1 to PS19/5 contains the list of respondents who did not ask for their responses to be kept confidential. FCA has published the handbook and Binding Technical Standards in the near-final form so that stakeholders are clear on the changes expected to be made to the regulatory framework. These Binding Technical Standards impact the stakeholders under the varied EU legislation, including the Credit Rating Agency Regulation, Capital Requirements Directive and Regulation, Packaged Retail and Insurance-based Investment Products Regulation, Markets in Financial Instruments Directive and Regulation, and Insurance Distribution Directive, among others. Based on the timetable of the Parliament, FCA expects its Board to make the instruments final on March 28, 2019 if a withdrawal agreement has not been ratified by UK and EU.
HM Treasury has laid draft regulations in the Parliament (Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019), which grant FCA the powers to make transitional directions to mitigate any disruption caused by EU exit-related changes to firms’ obligations. These directions give regulated persons time to adapt to the Brexit-related changes to the UK financial services regulation. Continuity is generally achieved by applying a standstill; therefore, firms may continue to comply with the pre-exit version of an obligation. In addition, the temporary permission firms are allowed substituted compliance for home-state obligations. This power would only be used if UK leaves EU without an implementation period. The directions have been prepared on the assumption that the EU exit statutory instruments referred to in them will be in force by the exit day.
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Keywords: Europe, EU, UK, Banking, Insurance, Securities, Brexit, FCA Handbook, Transitional Direction, PS19/5, CRA, FCA
