U.K. – FCA Brexit Transitional Power

U.K. – FCA Brexit Transitional Power

Updates to Directions

  • FCA has updated and published draft directions under temporary transitional power.
  • TTP allows flexibility in applying post-Brexit requirements, allowing firms to transition.
  • Would only come into effect on exit day if UK leaves without implementation period.
  • Under the directions, firms do not generally need to prepare now to meet the changes.
  • However, in some cases where FCA considers it important for its objectives, it expects firms to take reasonable steps to comply with post-exit obligations from exit day.
  • For example in relation to key reporting obligations; set out approach in February 2019.
  • Draft directions published today under TTP update directions made on 28 March 2019.
  • Alongside this FCA also updated explanatory note providing guidance on use of TTP.
  • The draft directions are being published now to give firms time to consider changes.

Main Changes

  • Extending the proposed duration of directions from 30 June 2020, to 31 December 2020.
  • Updating the provisions relating to prudential requirements in the directions to reflect new HM Treasury legislation and FCA exit instruments published since 29 March 2019.
  • Revoking certain directions in relation to payment services, provided by EEA credit institutions in the financial services contracts regime, as these are no longer needed.
  • Applying a standstill direction to allow EEA central banks and the European Central Bank to continue to rely upon their status as exempt persons until 31 December 2020.

Track Changes

Next Steps

  • FCA does not expect to make significant changes to draft directions in advance of exit.
  • Firms can make FCA aware of any changes they believe are not fully accounted for.