FCA Consults on Financial Services Contracts Regime for No-Deal Brexit
FCA published a consultation paper (CP19/2) that sets out details of the financial services contracts regime (FSCR). CP19/2, which should be read in conjunction with the FSCR Regulations, contains the FCA proposals for rules that will apply to firms in the FSCR. The last date for comments was January 29, 2019. The FSCR allows the European Economic Area firms to conduct an orderly exit from the UK, in case the UK leaves EU without an implementation period. FCA recently updated its information on FSCR and plans to publish the final text of the proposed rules,, along with the feedback to CP19/2, before the exit day.
The FSCR Regulations will allow European Economic Area firms—that have pre-existing contracts in the UK and that would require a permission to service these contracts—to continue to carry on the relevant regulated activities in the UK for a limited period. FCA needs to amend its Handbook to apply the appropriate rules to firms under the FSCR for this UK business and is, therefore, consulting on the application of these rules in CP19/2. The FSCR will work alongside the temporary permissions regime, which enables inbound European Economic Area firms to access the UK market while seeking full authorization in the UK. The FSCR will provide two discrete mechanisms:
- Supervised run-off—for the European Economic Area firms with UK branches or top-up permissions in the UK and firms who entered the temporary permissions regime but did not secure a UK authorization at the end
- Contractual run-off—for the remaining incoming services firms
The consultation paper is relevant for European Economic Area firms that are passporting into the UK under the Financial Services and Markets Act 2000 (FSMA) and Treaty firms. It is also relevant for European Economic Area electronic money and payment institutions and registered account information service providers passporting into the UK.
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Comment Due Date: January 29, 2019
Keywords: Europe, UK, Banking, Insurance, Securities, FSCR, Brexit, CP19/2, FSCR Regulations, FCA
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