HMT, Bank of England and FCA set out approach to onshoring financial services legislation

The Treasury, the Bank of England and the FCA have published information about how financial services legislation will be on-shored under the EU (Withdrawal) Act, in particular to ensure the (hopefully unlikely) ‘hard Brexit’ scenario is addressed, if the negotiated implementation period is not able to take effect from March 2019.

The Treasury intends to lay the first financial on-shoring services SIs before Parliament soon; these will include SIs relating to a temporary permissions regime for EU firms operating in the UK, a temporary recognition regime for central counterparties.

Additionally, the financial services regulators, including the Bank of England, PRA and FCA, will be given powers to address any deficiencies in their rulebooks and to amend and maintain the EU Binding Technical Standards that will become part of UK law.

The Bank of England and the FCA indicate that they intend to consult on proposed changes this autumn, in co-ordination with other regulators where appropriate.

The FCA also notes that in the run up to March 2019, they will limit Handbook changes unrelated to Brexit to ‘essential’ changes, including those areas identified in the FCA’s Business Plan as core priorities.  This is likely to mean that initiatives such as work on illiquid assets or the remit of Independent Governance Committees is likely to be delayed.