Nausicaa Delfas has spoken on the FCA’s approach to Brexit. She looked at how it is preparing and forward to the future. She stressed that FCA is working hard with the Government and other regulators to ensure the smoothest transition possible and promised highly integrated markets in the future regardless of the Brexit outcome.
FCA is assuming a transitional period to the end of 2020, but knows it must prepare for a hard Brexit with no deal. Key among FCA’s initiatives are:
- dealing with the cliff edge risks of contract continuity, which are particularly prevalent in the insurance and derivatives markets. She said each side could in fact take a unilateral approach to this risk although FCA hopes for a joined up approach;
- work around the EU Withdrawal Act to assess aspects of UK law and regulation which will need to be amended to ensure it works properly post-Brexit – for example amending references to EU bodies and addressing the loss of passporting. FCA is planning a consultation in the autumn on necessary rule changes and will make only essential other Handbook changes, or those in line with FCA’s Business Plan, until after Brexit;
- a temporary permissions regime, which will allow EEA firms and funds that currently passport into the UK to continue to do so (Treasury has agreed to legislate to allow this). The regime will allow these firms to continue to operate as they currently do, for a defined period, while they seek UK authorisation. FCA has already put in place a mechanism to allow firms to say whether they wish to take advantage of this, and, once confirmed, will issue firms with their landing slots, as it did with the consumer credit regime. It is of course aware that this cannot help UK firms passporting out, and hopes for a reciprocal arrangement;
- ensuring firms know what FCA expects of them. She gave examples of firms needing to:
- ensure FCA can still adequately supervise them, if they are putting in place new structures;
- checking their supply chains are prepared for Brexit;
- making sure there is sufficient oversight in the UK; and
- communicating clearly and fully with their customers.
FCA has created a new webpage to help firms.
For the future, FCA continues to strive forwards maximising market access and benefits to consumers and says neither side wants to see a significant misalignment in regulatory standards. So it is critical to work towards common outcomes as regulation evolves and the laws cease to be identical.
Apart from its relationship with the EU 27, FCA is also working on MoUs with regulators around the world.