The Brexit transition period is currently operating until 31 December 2020. The FCA have produced a list of key considerations to help firms consider how they will be impacted by this and what action they may need to take.
How firms will be affected by Brexit at the end of the transition period will depend on a number of factors, including the nature of their business, the location of their customers, and any agreements in place concerning the future UK/EU relationship. The FCA therefore highlights the following issues that will affect all firms:
- Changes to legislation in the UK.
- Temporary transitional power (powers granted by the treasury to the FCA, which allow them to give flexibility to firms in implementing post transition requirements).
- Users of credit ratings – at the end of the transition, any UK entity that wishes to issue credit ratings must be registered or certified with the FCA.
- Data sharing between the UK and EEA.
- Communicating with customers, in light of Principle 7 and the FCA Handbook rules, regarding how the end of the transition period will affect them.
In terms of next steps, the FCA have advised that firms who think their customers may be affected by the end of the transition period should:
- work out a plan for implementing any changes they may need to make to their business or agreements with customers.
- think about any information they need to give to customers who might be affected by such changes, and consider how to provide this in a clear, fair and not misleading way.
- continue to consider the implications of a ranges of scenarios, including the possibility that the UK and the EU do not conclude a free trade agreement or make any equivalence determinations before the end of the transition period.
- engage in discussions with relevant EEA regulators in the countries in which they do business.
The FCA have also agreed a Memoranda of Understanding with ESMA and EU regulators covering cooperation and exchange of information. This comes into effect at the end of the transition period (31 December 2020).