Financial services: a Brexit update from the FCA's Nausicaa Delfas

The FCA has published a speech, link here, delivered yesterday by Nausicaa Delfas, Executive Director of International at the FCA. In summary:

Continuity of contracts

The FCA have identified contract continuity as a key “cliff edge” risk, requiring action from both the UK and EU to resolve satisfactorily. The FCA are engaging EU authorities on the point particularly through a technical group set up by the Bank of England and the ECB.

FCA Handbook

There will be a consultation in Autumn 2018 on changes to the FCA Handbook to ensure it functions effectively post-Brexit. At this stage, the intention of the FCA is to ensure the same rules and laws apply both before and after Brexit. In the long-run, the FCA believes that the UK and EU rules may “evolve” but in such a way that they allow delivery of common outcomes.

Temporary permission regime

There will be a Temporary Permissions Regime (TPR) for firms and funds inbound to the UK. It will be open to FCA authorised firms and funds currently using a passport to operate in the UK and will allow them to continue to operate without authorisation. Firms benefitting from a temporary permission will be able to enter into new business and fulfil existing contracts with UK customers for a defined period after exit day. Once they have temporary permission, firms and funds will be given a period of time in which they will need to submit their application for authorisation in the UK, with the first of the slots to be later in 2019. There is currently a short survey on the FCA website for anyone planning to use the TPR. A draft version of the SI implementing the TPR is expected to be circulated next week (week commencing 23 July).

Senior management

Given senior management moves which may be required as a result of Brexit contingency planning, firms should ensure that there is still appropriate senior oversight remaining in the UK.

MoUs

In terms of global planning, the FCA have confirmed they have started discussions with regulators around the world on the MoUs which underpin third country equivalence, access and information sharing.