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
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