On 18 January 2019, there was published a transcript of the oral evidence given by Andrew Bailey (Chief Executive, FCA) and Charles Randell (Chairman, FCA) to the House of Commons Treasury Committee on 15 January 2019.

Among other things Mr Bailey touches on the FCA’s assessment of how well firms have adapted to the MiFID II requirements. Mr Bailey explains that the FCA has done supervisory work and that it will publish its conclusions fairly shortly (in a month or two). Mr Bailey adds that the FCA is doing three things: the first piece of work, which the FCA has done, is on costs and charges. The second and third pieces of work the FCA is doing this year is on new product governance and research unbundling. Mr Bailey also confirms that at the moment there is no ongoing enforcement action against firms in relation to MiFID II compliance, the FCA has instead been focused on supervisory action.

In relation to Brexit and the statutory instruments that are being prepared in the event of a no-deal Brexit Mr Bailey states:

“In our world, we have on the latest count 62 statutory instruments in varying stages of going through, which is what we tend to call on-shoring the EU. Of those, 43 have now been laid in Parliament, 16 have been made, another 10 have been published in draft and we have about nine to go. About 50 of those are the Treasury’s and about 12 of them are other Departments.”

In addition Mr Bailey also touches on the systems changes that firms will have to make in the event of a hard Brexit:

“Where we have had to change things because of the so-called inoperables, quite a lot of those are very straightforward to implement for firms on the spot. Some of them are not because they involve systems changes. The question then is this: if the change cannot be made effectively in practice at the end of March, what do we do? The proposed solution, which you have probably been written to about – and I will slightly caricature this point – is to say, although continuing the EU arrangement is inoperable, the most realistic thing to do is to lock down what I call the 29 March treatment, say we would have the power to override the inoperable for a period of time, and say, “It is going to take this long to do the systems changes or whatever, so in the intervening period firms should continue doing what they were doing on 29 March.

“I realise that that sounds quite tame; put it that way. It is quite a big intervention. It is over to you in a way, but we want the transparency and accountability of the use of this power to be as sensible as it ought to be. I would only ask, because a lot of this is in the wholesale market, an area where we have to act quickly, that it be ex post rather than ex ante. I am more than happy for it to be as accountable and transparent to you as you would like. As you discuss and debate it, I am very happy to agree and discuss whatever accountability and transparency you as Parliament think would be appropriate in the use of that power, should we have to do it.”