On 28 January 2020, there was published on the legislation.gov.uk website, the Financial Services (Consequential Amendments) Regulations 2020 (the Regulations), together with an explanatory memorandum.

The Regulations are being made under the European Union (Withdrawal Agreement) Act 2020 (Act 2020) to delay the application of a number of financial services temporary permissions and transitional regimes established by EU Exit instruments made under the European Union (Withdrawal) Act 2018 (EUWA 2018), so that they apply by reference to the end of the Implementation Period (IP) rather than exit day (31 January 2020).

When discussing the temporary permissions regime, the explanatory memorandum to the Regulations states (at paras 7.1 to 7.4):

“HM Treasury has made more than 50 EU Exit statutory instruments under the EUWA 2018 to ensure there is a functioning legal and regulatory regime for financial services from exit day in all scenarios. These SIs were originally due to commence on exit day.

Paragraph 1 of Schedule 5 to the Act 2020 contains a general rule that delays those parts of these instruments that come into force immediately before, on, or after exit day so they instead come into force at the end of the IP, by amending references to “exit day” in the relevant commencement provisions to “IP completion day”.

However, this will not apply to a number of financial services temporary permissions and transitional regimes, which have already commenced in order for the UK regulators and affected firms to begin preparing for those regimes before exit day. For example, provisions allowing EEA passporting firms to notify the regulators in order that they can enter the Temporary Permissions Regime (TPR) on exit day are already in force.

These pre-exit provisions need to remain in effect during the IP, in order that the regulators and firms can continue to prepare for the end of the IP – for instance, to enable firms to continue to notify the regulators during the IP of their intent to enter the TPR. However, the application of the regimes themselves will need to be delayed until the end of the IP. If they were not delayed, these regimes would still start on exit day and would run in parallel to the IP. This would result in significant legal uncertainty for industry and would constitute a breach of the UK’s commitments under the Withdrawal agreement to apply EU law during the IP.”

The Regulations will come into force immediately before exit day.