The following is a summary of the FCA EU Withdrawal roundtable meeting, held with the Association of Professional Compliance Consultants on 19th July 2019. Although some aspects do not impinge upon our readers, we thought it would be helpful to include the full summary.
- The FCA is planning for all alternatives but is clearly contemplating a Hard Brexit (“HB”) and is now planning more specifically for this.
- We were reminded that the window for EU firms in the UK to apply for temporary permissions has been extended to 30th October.
- The process of onshoring (i.e. fully implementing) EU regulations continues.
- The FCA has reached Memoranda of Understanding with the SEC in America and ASIC in Australia.
- There was some discussion with respect to the treatment of EU regulations that are not in a position to be onshored by 31/10. Legislation is going through Parliament for treatment of what are termed “inflight files” (EU legislation and regulations which are expected to be competent for implementation only after Brexit Day). Since the premise is that these provisions do not reach fruition before the UK leaves, there is no obligation to give effect to them, but the proposed legislation will provide for entities such as the FCA to do so if it considers this appropriate. All the FCA could say at this stage was that it was monitoring the position.
- It was noted that 31 October is midweek, and this makes a clean move to post-Brexit reporting requirements a bit tricky. All the FCA would say for now was that it was alive to the issue.
- A statement from the FCA is expected on whether (and by how much) any transitional relief period might be extended.
- There was quite a bit of discussion about the Share Trading Obligation (and the counterpart Derivative trading Obligation). Purely UK shares are to be withdrawn from the STO at Brexit, and although this may make for difficulties with respect to dual listings (UK and an EU Member State), the FCA has not moved from it position statement on the matter from April.
- Loss of the passport was considered by FCA to require repapering of clients but nothing obviously more dramatic.
- About post-Brexit equivalence, it is a given that on Brexit Day the UK will be (remain) equivalent. How the UK remains equivalent going forward is likely to need to be resolved with the EU Regulators on a case by case (area by area) basis. It is impossible to be more precise for now.
- A question was asked with specific reference to data protection equivalence, and it was noted that apparently the EU does not yet consider the UK to be operating in full compliance with GDPR (!) The FCA is alive to this matter, but considers this in essence to be a matter for the ICO.
- Mention was made of the EU proposals for harmonised consumer credit regulation (unlikely to be in force before summer 2020). This is against a background of proposals for regulatory guidelines for lending to professionals and leasing transactions.
- The provisional date of 30/6/20 for equivalence and mutual recognition appears not to have been put back, even though it correlates less well to a 31/10 departure than to the original late March date. While EU regulations due for implementation will have been on-shored by 31/10, the remaining 8 months are not a realistic timespan for moving to mutual recognition (simply too much to do) in the event of HB.
- A curious issue regarding insurance was mentioned, which arose for a firm moving its UK HQ to Belgium, where its staff were all suddenly found to require degrees in insurance or related subjects from university. Although apparently there is a basis for equivalence recognition between the UK and Belgium on this, the Belgian regulator was not helpful and dragooned the transferred UK staff into taking a load of exams in French. FCA had not apparently encountered this issue previously and were keen to be apprised of developments.
- There was discussion around preparedness of pension schemes, though it was concluded that in effect this revolved around the preparedness of a given OPS’s manager.
- The FCA advised all firms to review the relevant page on their website for current information.