On 29 November 2018, the FCA published an EU Withdrawal Impact Assessment (the Assessment). The Assessment has been published following a House of Commons’ Treasury Committee request that the FCA assess the impact of the UK’s exit from the EU across three areas:

  • the UK leaves the EU without an agreement either on 29 March 2019 or after the transitional period on 31 December 2020;
  • the draft Withdrawal Agreement; and
  • the outline of the political declaration on the framework for the future relationship between the EU and the UK.

Among other things the Assessment states:

“For the FCA, the risks presented in an implementation period are preferable to the risks of a no-deal scenario. As the implementation period is extendable for up to two years by agreement between the UK and the EU, this could assist in helping to avoid further cliff-edge risks at the end of the period. However, it will be important to consider the risks associated with any extension and to work during the period to avoid new cliff-edge risks arising.”

The comments the Assessment makes on the political declaration of the future relationship includes:

“The UK and EU will both have the ability and common interest to find each other’s regimes equivalent post exit, facilitating market access across a range of sectors. The declaration appropriately recognises that this must be in the context of both sides retaining autonomy over the exercise of their equivalence regimes. Therefore, equivalence assessments will need to be based on equivalence of outcomes as opposed to identical rulebooks. It will also be necessary to consider carefully the process and scope of equivalence as it currently exists, to ensure that it provides an adequate framework for cross border business in the future. We believe that there is substantial scope for development and improvement of the framework.”