FCA to extend use of temporary transitional power
The Financial Conduct Authority (FCA) has confirmed it intends to extend the duration of the directions issued under the temporary transitional power to the 31 December 2020 to reflect the extension of Article 50.
The temporary transitional power is intended to minimise disruption for firms and other regulated entities if the UK leaves the EU without a withdrawal agreement.
Under this power, firms do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit.
Nausicaa Delfas, executive director of international at the FCA, said:“The temporary transitional power is a key part of our contingency planning if the UK leaves the EU without an agreement.
“This extension should give firms and other regulated persons the time they need to phase in any regulatory changes they may need to make as a result of “onshored” EU legislation.
“The power will provide certainty, ensure continuity and reduce the risk of disruption.
“As we said in February, there are some areas where it would not be appropriate to phase in the changes. For example, reporting rules under MiFID II as receiving these reports is crucial to our ability to ensure market oversight and the integrity of financial markets.
“In these few areas only, we still expect firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by exit day.”
The FCA expects firms to use the additional time between now and the end of October to prepare to meet these obligations, and if not the authority will expect evidence as to why this was not possible.
The extension is aligned with the end date intended by the Bank of England and the Prudential Regulation Authority (PRA).