The Financial Conduct Authority (FCA) yesterday published almost finalized rules and guidelines that would be adopted if the UK left the EU without a deal. Most of the proposed changes are based on the powers granted to the FCA by the EU (Withdrawal) Act, hence, they have to be approved by Her Majesty's Treasury.
The proposals are part of the FCA's overall goal of delivering a smooth transition for UK financial services firms. The official papers released today are a confirmation of the FCA's proposals in case of a hard Brexit and were compiled using feedback collected through several consultation papers.
The documents also elaborate on how the regulator shall treat firms based in Gibraltar following Brexit including the interim transition power. This interim power will allow the FCA to modify or waive alterations to legal requirements that have been modified by the EU (Withdrawal) Act.
The FCA plans to use this interim power to give regulated firms a grace period of up to 15 months to comply with any new UK regulations that arise following Brexit. However, the UK regulator has also outline critical areas where regulated firms should prepare to comply with before Brexit.
FCA Executive Director of International, Nausicaa Delfas explained:
The FCA has been preparing for a range of scenarios, including the possibility that the UK leaves the EU in March 2019 without an implementation period. The documents published today are a significant milestone in this work: they ensure that there is a functioning regulatory regime from day one, and that firms are clear as to the requirements they need to meet by end March 2019 and beyond, so they can continue to meet the needs of their customers.