As the UK and the EU agreed a post-Brexit trade deal on 24 December, the UK’s Financial Conduct Authority issued guidance for financial services firms in order for them to prepare for the end of the transition period.
The post-Brexit deal agreed in Brussels came after months of negotiation and four and a half years after UK citizens voted in a referendum to exit the European political bloc.
Under the agreement, trade between the UK and EU will continue on a tariff-free basis.
Charles Michel, president of the European Council, said: “These have been very challenging negotiations but the process is not over. Now is the time for the Council and the European Parliament to analyse the agreement reached at negotiators’ level, before they give their green lights.”
Meanwhile, the UK’s Financial Conduct Authority (FCA) has worked with other UK authorities to introduce the temporary permissions regime (TPR), as passporting for firms will not be available after the end of December.
Passporting, the FCA explained, allows firms authorised in a European Economic Area (EEA) state to conduct business within other EEA states based on their “home” member state authorisation.
The TPR will allow firms based in the EEA passporting into the UK to continue operating in the UK within the scope of their current permissions for a limited period, while they seek full FCA authorisation, if required.
The deadline for EEA firms to notify the FCA they want to enter the TPR is 30 December.
The Financial Services Register of firms, other bodies, and individuals regulated by the Prudential Regulation Authority and/or the FCA will not be available from late evening 31 December to early morning 4 January.
Additionally, the UK authorities have introduced the financial services contracts regime, which will allow EEA passporting firms that do not enter the TPR to wind down their UK business in an orderly fashion, the FCA said.
As passporting ends, the FCA warned that:
- UK firms should take steps to ensure they act consistently with the local laws and expectations that govern the extent to which they can continue to provide services to customers in the EEA.
- Issuers should be “particularly vigilant in ensuring procedures, systems and controls for the protection and disclosure of inside information are met” and warned that market participants should be “aware of the FCA’s significant detective capabilities”.
- If a bank is no longer able to provide services in the EEA, the FCA expects they should give customers sufficient notice that it plans to close an account.
Further details on how firms should prepare for the end of the transition period have been issued by the FCA.
CIMA also provided Brexit resources for its members.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.