FCA and BoE Issue Updates on Brexit Preparations for Financial Sector
FCA and BoE published important information to help regulated firms in preparing for Brexit. FCA specifies that, as UK prepares to leave EU, regulated firms should have, by now, considered if or how they will be affected and what action they may need to take. FCA also published links to dedicated Brexit websites hosted by certain financial regulators in the European Economic Area (EEA) member states. Furthermore, BoE published a letter from the Governor Mark Carney, in response to a previous Treasury Committee letter concerning the Brexit scenarios that were published by BoE in November 2018. The publication on Brexit scenarios had analyzed how different Brexit outcomes would affect the ability of BoE to meet its monetary and financial stability objectives.
The UK will leave EU without an implementation period on October 31, 2019, unless a deal is approved or a further extension is agreed. To help firms prepare, FCA has established a dedicated telephone line for firms that constitute a UK business with any business in EEA, that passport into the UK and have not notified FCA for entry into the Temporary Permissions Regime, that have consumers in EEA, and that transfer personal data from EEA. FCA described considerations for UK firms and EEA firms conducting business in UK. FCA also highlighted issues for all firms to be aware of including passporting, changes to legislation in UK, temporary transitional power, data sharing, and communicating with customers affected by Brexit. As a next step in preparing for Brexit, FCA expects that firms should complete their assessment of the extent to which Brexit affects them. If affected, firms should:
- Work out and plan for implementation of the changes that might have to be made to the business
- Communicate the information to the customers that might be affected by the changes
- Continue to consider the implications of a range of possible scenarios, including the potential absence of any implementation period
BoE had published scenarios on Brexit outcomes in November 2018. The recently published BoE letter highlights that the Brexit scenarios BoE had published earlier were not forecasts, rather they illustrated what could happen under a range of key assumptions. A Treasury Committee letter to BoE had asked whether the analysis published in November 2018 remained fully relevant given any developments since November; if not, how the developments may have changed the outlook in each scenario. The most recent response letter from the BoE Governor states that, since November, there have been some developments in economic data and financial markets, but these do not merit updates to any of the BoE November scenarios. The letter also mentions that advancements in preparations for a no-deal, no-transaction scenario means that the BoE assessment of a worst-case, no-deal, no-transaction scenario has become less severe. The letter expands on details underlying these assessments.
Related Links
- FCA Press Release
- Preparing for Brexit
- Links to Member State Brexit Information (PDF)
- Overview on Preparing Firms for Brexit (PDF)
- BoE Letter
Keywords: Europe, UK, Banking, Insurance Securities, Brexit, Financial Stability, Brexit Scenarios, BoE, FCA
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