EU Withdrawal – transition period for new FCA rules to apply
The FCA has published an updated version of the FCA Handbook to show the rules that will apply at the end of the transition period. It has also set out details on how it intends to use the Temporary Transitional Power (TTP).
The TTP gives the FCA flexibility as to how and when changes to its rules apply following the end of the transition period, allowing firms to transition to the new regime. Where it applies, the TTP means that firms and other regulated persons can continue to comply with their existing requirements for a limited period, namely from the end of the transition period until 31 March 2022. This means firms and other regulated persons do not generally need to prepare now to meet the changes to their UK regulatory obligations brought about by onshoring.
Some changes will apply from 31 December 2020
There are areas where it would not be appropriate for the FCA to grant relief at the end of the transition period. Those key areas include:
- MIFID II transaction reporting
- EMIR reporting obligations
- SFTR reporting obligations
- Certain requirements under MAR
- Issuer rules
- Contractual recognition of bail-in
- Client Assets Sourcebook requirements (CASS)
- Market-making exemption under the Short Selling Regulation
- Use of credit ratings for regulatory purposes
- Electronic commerce EEA firms
- Mortgage lending after the transition period against land in the EEA
- Payment Services – strong customer authentication and secure communication
Most of these will not apply to the typical adviser firm but it is for firms to assess whether any do apply. In these key areas, the FCA expects firms and other regulated entities to prepare now to comply with the changes to their regulatory obligations by 31 December 2020.