The FCA has said it is continuing to make contingency plans for all Brexit scenarios, including “no-deal”, as negotiations continue.
The government’s latest white paper on Brexit proposed an “equivalance of rules on an outcomes basis” regime for financial services allowing the UK and EU access to each others markets.
In a speech by FCA international director Nausicaa Delfas this morning, she says that while “the FCA takes no position on whether Brexit is a good or bad thing in itself”, the regulator will continue to support the government with technical advice.
Delfas says that the transition period until the end of December 2020 “is a good thing for both sides” and is something the FCA had called for to give more preparation time and to smooth the implimentation of Brexit.
However, she notes “cliff-edge” risks still exist, including contract continuity, where a no-deal scenario could leave insurers unable to pay out claims on policies, and that because negotiations are still ongoing the regulator “must prepare for all scenarios”.
Backstops the FCA has been working on include its Temporary Permissions Regime which, if necessary, will allow European firms and funds trading into the UK under a passporting arrangement to continue doing so without a further authorisation requirement for a short period should passporting end.
However, the EU has not yet outlined any similar set up for UK firms wishing to passport out.
Delfas says that despite the uncertainty “firms need to maintain threshold conditions and [the FCA’s] rules throughout”
She says: “We expect you to continue to service your customers as fully and fairly as the law permits, and to communicate with affected customers, in the UK and elsewhere, in a clear and timely fashion, including, for example, what regulatory protections will apply for your customers.
“It is of course for the government to negotiate – but we have been clear about thesort of arrangements on financial services that we believe are possible, and desirable, to maximise market access and benefits to consumers in the UK and EU. These include the five principles of: cross border market access; consistent global standards to support global markets; co-operation between regulatory authorities; influence over standards; and the opportunity to recruit and maintain a skilled workforce.”