It’s almost exactly three years since the referendum on Britain’s withdrawal from the European Union, and despite a number of deadlines looming then passing, there’s been very little to give you any certainty of what’s to come.
Business as usual
Among the Conservative Party leadership race and the fallout from the EU elections, it’s easy to get distracted, or even complacent.
But despite the chaos, business continues. The regulatory world still moves on, and you will still be expected to meet your obligations, whatever the ultimate outcome of Brexit.
The future is unclear, but in reality the next steps – for the country and for your firm – haven’t really changed. A no-deal scenario is absolutely still a possibility, confirmed by the candidates for Conservative leadership.
Theresa May’s successor will take over from her this summer, but the options available to them will remain the same.
As the cliché goes, you should continue to plan for the worst and hope for the best. A no-deal is the default plan option, and it’s here that your preparation efforts should be focussed, along with your current regulatory responsibilities.
For financial services firms the default option is that there will be no passporting of services.
You should ask yourself:
- Do we have EU27 customers serviced from the UK? If so, how can I service them in a worst-case scenario?
- Do we have UK customers serviced from the EU27? If so, how can I service them in a worst-case scenario?
This could change if the new Tory leadership focusses on a new direction or new deal. In the event of a no-deal Brexit, a number of jurisdictions have passed transitional arrangements to minimise disruption and there are a number of EU-wide arrangements for a no-deal Brexit.
However, the coverage is patchy both at a country level and for different types of financial services activities. As a result there is no single replacement for passporting.
The regulatory world keeps spinning
The regulatory pipeline and business as usual does not slow down. The focus on individual accountability will step up a notch with the extension of the Senior Managers & Certification Regime (SM&CR).
Elsewhere the cyber threat to you and your customers’ data continues unabated. Small to medium-sized firms need to seriously consider their response to cyber threat.
And as organisations shift and focus on technological advancements, regulations are also changing. You need to consider how to manage some of the advanced technology that you’re implementing, such as artificial intelligence and machine learning, and how that interacts with ethical use of customer data. This is another area of regulatory focus, along with the amount of financial resources you hold to manage your risks.
None of these areas will be put on hold just because Brexit confusion continues.
Don’t be lulled into complacency by the FCA’s apparent lack of action when it comes to reviewing recent changes like MiFID II, GDPR and IDD. Brexit has been all-consuming, creating a backlog of work for the regulator. But all of this will soon come back into the spotlight, certainly post-Brexit, and you need to be ready.
Stay in the loop
Brexit remains right at the top of the FCA’s agenda going into the fourth year of preparation, so it’s right at the top of ours too. Follow our updates to keep track of all the regulatory changes brought about by EU withdrawal – we’ll help bring you clarity among the confusion.
We’re also in regular contact with the FCA, so we can share insight to help you communicate with the regulator, and to prepare your contingency plans for the end of October.
Any questions? Speak to us and find out how we can help