On 19 July 2018, the FCA published a speech given by Nausicaa Delfas (Executive Director of International, FCA). The speech, The FCA’s approach to Brexit: our preparations and our vision for the future, discusses the FCA’s preparations for Brexit.
Key points include:
- the FCA is planning for a range of scenarios including the possibility of a ‘no-deal’ or ‘hard’ Brexit in March 2019;
- the changes that need to be made to UK financial services legislation will also mean changes to the FCA Handbook which the FCA intends to consult on in the autumn. In the run up to March 2019, the FCA will limit any other Handbook changes to those that are in line with its Business Plan, or otherwise essential;
- the temporary permissions regime will allow EEA firms and funds using a UK passport to continue to operate, without needing to apply for authorisation for a limited period of time. The FCA will be issuing more communications on what firms will need to do in order to register for temporary permission and will be consulting on the related FCA rules. Once a firm or fund has temporary permission, they will be given a period of time, or ‘landing slot’, within which they will need to submit their authorisation application. The FCA will confirm landing slots to firms in due course so that they can prepare their applications. The FCA expects the first of these slots to be later in 2019, with the last timed towards the end of the temporary permissions period; and
- the fact that there is no reciprocal temporary permissions regime from the EU presents a number of challenges both in terms of commercial certainty and business disruption, but the FCA feels that the regime is necessary to provide certainty and smooth the transition; something it stands ready to discuss with its EU counterparts.
The speech also mentions that firms will need to maintain the threshold conditions and the FCA rules throughout Brexit. Some of the areas that the FCA has been discussing with firms so far include:
- if a firm is expanding its presence in Europe, the structures that it puts in place must enable the FCA to supervise the UK business effectively, and ensure that it continues to meet the threshold conditions;
- whilst firms are making their preparations, they should check that their supply chains are similarly prepared;
- if a firm is relocating its senior management, it must ensure that appropriate senior oversight remains in the UK; and
- the FCA expects firms to continue to service its customers as fully and fairly as the law permits, and to communicate with affected customers, in the UK and elsewhere, in a clear and timely fashion, including, for example, what regulatory protections apply to them.
Finally the speech refers to a new FCA web page, Preparing your firm for Brexit. This web page is designed to help firms understand whether they will be affected by Brexit, and if so, to:
- work out what changes the firm might have to make to its business, or which additional regulatory permissions it may need to continue to carry it out;
- think about any information the firm will need to give to its customers, in a way that is clear, fair and not misleading;
- consider the implications of a range of possible scenarios including an implementation period; and
- discuss implications with the relevant EEA regulator, trade association and / or get independent legal advice.