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
Previous Article
CBIRC Issues Measures for Corporate Governance of Banks and InsurersRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards