It is well documented in its 2018/19 Business Plan that the FCA's work on Brexit preparations is taking a significant amount of resource. On 19 July we were given more insight into this work by FCA Executive Director of International, Nausicaa Delfas, who gave a speech on the FCA's approach to Brexit and announced the launch of a dedicated webpage, Preparing your firm for Brexit, aimed at helping firms to understand whether they would be affected by EU withdrawal. Key points include:

  • Contract continuity remains a significant issue for firms and the FCA. The FCA is a key participant in a technical group set up by the Bank of England and the European Central Bank. However, contrary to this, in a communication also published on 19 July it appears that the European Commission does not recognise that there is any general issue in relation to continuing to perform existing obligations.
  • The FCA will consult on Brexit-related changes to its Handbook in the autumn.
  • For EEA firms passporting into the UK the FCA has worked on a temporary permissions regime in case it is needed. There are no reciprocal arrangements for UK firms passporting out.
  • The FCA's focus is on meeting its objectives regarding consumer protection, integrity of the financial system and competition. Some issues firms might consider as part of their Brexit planning include:

    • ensuring they continue to meet the FCA's threshold conditions, e.g. that they are still capable of effective supervision and that appropriate senior oversight remains in the UK;
    • checking that other firms in the supply chain are prepared; and
    • communicating in a clear and timely way with customers about service continuity and regulatory protections.
  • Firms affected by Brexit should:

    • consider the implications of a range of scenarios including a transitional period;
    • work out what changes might have to be made to their business;
    • think about what information customers will need and how best to communicate it; and
    • discuss the implications with any relevant EEA regulator or trade association and/or take independent legal advice.

Although the FCA is working with a number of parties to try to ensure a smooth transition, with just eight months to go and no formal transitional deal agreed, firms and regulators must continue to prepare for a number of scenarios. For those firms that have been waiting and hoping for a political solution time is starting to run down; unless formal agreement is reached many will need to initiate their "hard Brexit" contingency plans in earnest in the next few weeks.

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