On 8 December 2022, the European Securities and Markets Authority (ESMA) issued a peer review report on Member State competent authorities’ (NCAs) handling of firms’ relocation to the EU in the context of the UK’s withdrawal from the EU. The report gives further insight into the supervisory approaches adopted by NCAs when authorising relocating firms in the scope of Brexit.

Key findings to the report include:

• NCAs allowed in certain cases for an extensive use of outsourcing/delegation arrangements.
• Several firms relocated with limited technical and human resources in the EU. In particular, NCAs applied different interpretations of proportionality when it came to substance requirements. This led in certain cases to some smaller firms relocating with only very minimal set-ups.

ESMA also makes certain recommendations for future work to achieve greater convergence at EU level on the application of the risk- based approach, the proportionality principle and on outsourcing/delegation arrangements.