Are you ready for a no-deal Brexit? FCA warns firms of dangers of failing to prepare
The FCA has increased its emphasis on preparing for a no-deal Brexit, warning firms that if they are not properly prepared there’s a danger their business will be impacted.
The regulator is running digital advertising to push audiences to its Brexit webpages and telephone line.
This warning is particularly relevant for firms that:
- Are a UK business doing any business in the EEA
- Passport into the UK and have not applied to the FCA for entry into the Temporary Permissions Regime
- Have consumers in the EEA
- Transfer personal data from the EEA.
The FCA reiterates that it has measures in place to try and reduce the disruption a no-deal could cause. This includes the Temporary Transitional Powers and the Temporary Permissions Regime.
After Brexit, it will no longer be possible for UK firms to passport to do business in the EEA. The regulator warns that firms’ ability to do business in an EEA country depends on the type of activity, and local laws and authorities.
Businesses need to make themselves aware of EU Member States’ transitional regimes, deadlines and registration requirements.
Finally the regulator tells firms to think about the regulatory changes that could apply as a result of a no-deal, for example MiFID II transaction reporting.
[Speech] Financial services have made great progress in no-deal preparation
In a speech at Bloomberg in London, FCA Chief Executive Andrew Bailey gave an update on the state of Brexit preparations in financial services.
Bailey made the point that the global financial crisis, which he described as being the worst-case scenario actually happening, has instilled the absolute necessity of appropriate preparation into the financial services sector.
The FCA’s priority is its dedication to open global financial markets, and preserving the positive contribution of the UK’s financial markets. The FCA continues to work with regulatory authorities in the EU27 and participate as a member of the European Securities and Markets Authority. Bailey said that whatever the outcome of Brexit, the UK and EU markets will still be closely linked.
While he was very clear to insist that the FCA has no position on the substance of Brexit itself, it is preparing for all eventualities. That includes a no-deal scenario.
Over the past year, preparations in financial services have advanced substantially. The Bank of England has now said that – as a result of these preparations – the impact of a no-deal no-transition scenario isn’t as severe as it was a year ago, in its assessment.
But regardless of this work, Bailey insisted that there was no assurance that there would not be disruption as a result of Brexit.
The speech covered some of the main developments that have taken place, including:
- Legislation and the temporary transitional power
- New cooperation agreements with the EU markets, insurance and banking authorities, to come into effect in the case of a no-deal.
The FCA will take on several functions and responsibilities in the UK currently performed by ESMA, including:
- Credit rating agencies
- Trade repositories
- MiFID II.
There are seven remaining issues:
- The Share Trading Obligation (STO)
- The Derivatives Trading Obligation (DTO)
- Uncleared derivatives
- Data exchange
- Progress on contract repapering
- Retail financial services.
Bailey concluded with the next steps for the regulator. It will carry on working with firms to make sure their contingency plans are implemented, and will continue to work with regulators in the EU on issues that arise.