On 5 November 2018, the FCA published a speech by Nausicaa Delfas (Executive Director of International, FCA) entitled Maintaining market confidence: an update on Brexit.
The speech covers three areas:
- being ready for a no-deal Brexit;
- managing cliff-edge risks around March 2019; and
- looking to a post-Brexit world.
Highlights in the speech include:
- in line with the UK Government approach, the FCA is taking the baseline view that its rules must treat the EU as a third country. However, as the UK Government has done, there are some instances where the FCA has derogated from this baseline approach. For example, in the context of UK UCITS (which in some cases make a distinction between investments in EEA assets and investments in the rest of the world) treating EEA states as third countries could cause disruption for some funds and investors. In its consultation on Brexit, the FCA is proposing to allow UK UCITS schemes to keep the same freedom to invest in EEA assets as they do now;
- over 1,300 firms and funds have expressed an interest in joining the temporary permissions regime;
- the FCA’s approach to phasing in the changes that are made as part of the onshoring process will be pragmatic and proportionate. The FCA will consider the evidence around implementation challenges where they might occur. The FCA will set out more details in due course;
- firms are expected to continue to meet the FCA’s rules as they implement their Brexit plans. For example, if a firm is expanding its presence in Europe, any structures that it puts in place must allow the FCA to supervise the UK business effectively, continue to meet the threshold conditions, whilst providing appropriate senior oversight in the UK;
- the FCA does not see leaving the EU as an opportunity to join a race to the bottom in regulatory standards; and
- in terms of customers, firms need to understand the impact of Brexit on them, continue to service them fully and fairly, and communicate with them in a timely fashion. The FCA expects firms to let customers know if there will be any change to their ability to provide services to them post Brexit, and if any changes affect the customer’s products or contracts.