UK Authorities Update Rules and Guidance for End of Brexit Transition
BoE and PRA updated, on their respective webpages, information on their approaches to the temporary transitional power (TTP) related to the withdrawal of UK from EU. BoE and PRA also published general guidance on the transitional directions; the guidance supports the draft transitional directions published as part of the consultation paper CP13/20 on proposed changes to certain Exit Instruments before the end of the Brexit transition period. Additionally, BoE made available a checklist of actions to avoid disruption (stemming from cross-border activities) to end-users of financial services at the end of the transition period on December 31, 2020. Finally, with regard to the Brexit transition, FCA updated its Handbook with the rules that will apply at the end of the transition period, also setting out details on how it intends to use the temporary transitional power.
The general guidance on the transitional directions of BoE and PRA explains the general effect of the transitional direction of BoE and PRA, which is to delay onshoring changes that fall in the remit of BoE and PRA until March 31, 2022. The guidance also explains how firms and financial market infrastructure entities should interpret the regulatory obligations that apply immediately before the end of the transition period. The guidance notes exceptions to the general approach of BoE and PRA and the specific approach of PRA to the use of the transitional power for former passporting firms, in particular firms in the temporary permissions regime and Supervised Run-off Regime. Firms should have regard to these guidance while the transitional relief granted under the direction is in effect. The direction will come into effect at the end of the transition period and will apply until March 31, 2022, unless BoE and PRA decide to change this in future.
The temporary transitional power allows the financial services regulators of UK to delay or phase-in onshoring changes to the UK regulatory requirements arising at the end of the transition period. BoE, PRA, and FCA intend to use the temporary transitional power to provide broad transitional relief, with key exceptions, for 15 months after the end of the transition period, until March 31, 2022 (the temporary transitional power period). Where the temporary transitional power applies, firms and financial market infrastructure entities should use the temporary transitional power period to prepare for full compliance with their onshored regulatory obligations from April 01, 2022. BoE and PRA have identified certain key areas for which transitional relief is not available, including contractual recognition of bail-in rules, contractual stays, and Financial Services Compensation Scheme protection. Similarly, in certain key areas, FCA expects firms and other regulated persons to be preparing to comply with changed obligations ready for December 31, 2020. These areas include Securities Financing Transaction Regulation (SFTR) reporting obligations, use of credit ratings for regulatory purposes, securitization, and mortgage lending after the transition period against land in the European Economic Area.
Related Links
- BoE and PRA Notification
- FCA Press Release
- BoE TTP Webpage
- FCA TTP Webpage
- Guidance on Transitional Direction of BoE (PDF)
- Guidance on Transitional Direction of PRA (PDF)
- Checklist on Risks of Disruption (PDF)
Keywords: Europe, UK, Banking, Insurance, Securities, Brexit, Temporary Transitional Power, Transitional Direction, Securitization, PRA, BoE, FCA
Previous Article
SRB Launches Resolution Reporting Data Collection Exercise for 2021Related Articles
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
