We have less than 2 weeks to go until the end of the transition period. When it ends at 23.00 on 31 December, firms will need to be prepared for a number of significant changes to the regulatory environment in which they operate.
To help firms prepare, we have published extensive information on our website setting out the key issues firms need to focus on. These include:
- Making use of temporary transitional powers to provide firms with more time to comply with a large number of the changes.
- Key requirements that firms need to comply with by 1 January 2021, which are listed on Brexit section of the FCA website.
- The issues firms need to consider as a result of the current passporting system ending on 31 December 2020.
While we have been encouraged by the positive steps many firms have taken to prepare for the end of the transition period, all firms should make sure that they now have appropriate arrangements in place. This includes acting in accordance with local law and local regulators’ expectations, taking decisions based on obtaining appropriate outcomes for customers, and ensuring that firms communicate with their customers about any changes that impact them.
As always, we will continue to provide regular updates on our dedicated Brexit webpages, and firms can also call the FCA Brexit information line (0800 048 4255) if they have any further questions.
Last month we confirmed our approach to the share trading obligation (STO) at the end of the Brexit transition period, if mutual equivalence is not agreed.
We will use the Temporary Transitional Power (TTP) to avoid disruption and allow firms to continue trading all shares on EU trading venues and systematic internalises (SIs).
This use of the TTP means that UK market participants will continue to be able to access any EU trading venue from the end of the implementation period, providing the venue has ensured it has the relevant regulatory permissions in the UK.
More information on share trading obligation.
After the end of the transition period, we will be updating the Financial Services Register, to take account of the end of passporting for firms and funds and the start of the temporary permissions regime. More information on this will be communicated shortly.
EEA UCITS funds are currently marketed to the general public in the UK via a passporting regime, which will cease at the end of 2020 when the Brexit transition period comes to an end.
These funds may choose to continue marketing through the UK’s Brexit temporary marketing permissions regime (TMPR) for what is expected to be up to 5 years from 31 December 2020. During this period, a new “overseas funds regime” (OFR) proposed by the Treasury is expected to be implemented. TMPR funds will begin to transition to the OFR if their country’s regulatory regime is designated as equivalent by the Treasury.
There will be no changes for investors to FSCS or FOS coverage for EEA UCITS funds managed by EEA management companies from 1 January 2021.
There will be no changes for investors to FSCS or FOS coverage for EEA UCITS funds managed by EEA management companies from 1 January 2021. UK investors in EEA funds are not currently always covered by FSCS or FOS and this will continue following the end of the transition period. Firms, including advisors distributing EEA funds in the UK, must accurately assess whether their clients are covered by FSCS and FOS and ensure they comply with the applicable rules which are relevant to FSCS and FOS.
Where firms provide UK investors with information about relevant redress or compensation arrangements in the UK or in an EU Member State, the information must be fair, clear and not misleading and should be kept up-to-date and accurate after the end of 2020. Firms must also ensure that any reference in advertising to an investor compensation scheme is limited to a factual reference to the scheme.
Read more about TMPR and Brexit information on retail investments
In preparation for the end of the Brexit transition period we’ve developed a new UK Benchmarks Register. This will replace the ESMA Register for UK supervised users, and UK and third-country based benchmark administrators .
In September 2019, the UK extended the transitional period for third country benchmarks from the end of 2019 to the end of 2022 through the Financial Services (Electronic Money, Payment Services and Miscellaneous Amendments) (EU Exit) Regulations 2019. This was to give third country benchmark administrators more time to apply to us.
The Treasury is proposing to extend the transitional period for third country benchmarks again, from 31 December 2022 to 31 December 2025.
You can read more about our new UK benchmarks register here.
Last month we published statements which highlight our expectations of firms in relation to their UK SFTR reporting requirements and their UK EMIR reporting requirements immediately following the end of the transition period.
The statements included references to the UK EMIR and UK SFTR validation rules which should be used when submitting derivative transaction reports and securities financing transaction reports from 11pm 31 December 2020.
We have made a large number of EU exit-related instruments to amend the FCA Handbook and these changes ensure a functioning regulatory and legal framework for financial services will continue to be in place after the transition period.
The final instruments are largely unchanged from the versions consulted on in CP20/18, and are outlined in the Handbook Notice 83. Firms can use our webpages and the FCA Handbook site to see which onshoring changes will apply to them at the end of the transition period.
Passporting between the UK and EEA states will end at the end of the transition period. If your business currently takes place based on a passport then you should have considered if and on what basis it may be possible to continue after the end of the transition period, and taken steps as appropriate. You can find more information on our Brexit section of the FCA website.
Any further notifications for entry into the temporary permissions regime need to be submitted via our Connect system before the end of 30 December 2020.
Firms that have already submitted a notification need take no further action unless they need to update the details of their UK agents that were included in their earlier notification, or if they have started to use UK agents since they notified. For details, see our notification process for firms page.
Fund managers who have contacted us to let us know they will be updating their previously submitted notifications must also submit any updated notifications by the end of 30 December 2020. If new funds have been added to a fund manager’s population since an earlier notification was submitted, the new funds will not be included in the temporary marketing permission regime unless fund managers request to update their notification and include them in that updated notification. For details, see our website.
We have recently updated our Brexit website for consumers with more information about dealing with firms in the . We also provide more information about the position in relation to Financial Services Compensation Scheme cover and access to the Financial Ombudsman Service after the end of the .
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