On November 5, the UK Financial Conduct Authority (FCA) published a speech by Nausicaa Delfas, FCA Executive Director of International, on Brexit and maintaining market confidence.
The speech covers a wide range of Brexit topics and provides an overview of the FCA’s current priorities relating to Brexit, including its work to ensure there is a robust regulatory framework on exit day, if the United Kingdom leaves the European Union without an agreed transition period (No-Deal Brexit). Ms Delfas sheds light on the temporary permissions regime being implemented in the case of a No-Deal Brexit, stating that 1,300 EU-based firms and funds have expressed an interest in the regime. The temporary permissions regime will allow EU firms and funds to continue regulated business in the United Kingdom in the case of a No-Deal Brexit (for further details, see the July 27 edition of Corporate & Financial Weekly Digest).
In relation to the FCA’s expectations of firms, Ms Delfas states that firms should ensure that they are prepared, whatever the outcome of Brexit negotiations. The FCA expects firms to take their own legal advice on what a No-Deal Brexit might mean for them and their customers, and any steps they may need to take. The FCA also expects firms to understand the impact of Brexit on their customers, continue to service them fully and fairly, and communicate with them in a timely fashion. Firms should let customers know if there will be any change to their ability to provide services to them post Brexit, and if any changes may affect the customers’ products or contracts.
Ms Delfas highlights the fact that the FCA’s consumer objective goes beyond consumers in the United Kingdom and is relevant to consumers elsewhere who are served by UK firms. Ms Delfas states that the FCA has informed large international banks that they should only consider moving their activities which relate to non-EU clients away from the UK if it is demonstrably in the interests of such clients to do so.
Ms Delfas also discusses the risks which may arise in the event of a No-Deal Brexit, such as issues relating to data-sharing between UK and EU authorities, and the measures that have been taken to mitigate such risks. Ms Delfas highlights the importance of memoranda of understanding and other practical arrangements to support cross-border supervision of firms and data-sharing. In determining the future relationship between the EU and the UK, Ms Delfas calls for outcomes-based equivalence, as opposed to equivalence based on merely having sufficiently similar rules in place.
A copy of the speech is available here.