As part of the no-deal Brexit preparations, the Board of Supervisors of the EBA have confirmed that a template MoU has been agreed with the FCA and PRA. If there is a no-deal Brexit, this template will be used as the basis of the series of bilateral MoUs required between UK and individual EU supervisory […]
OFSI has updated its website to reflect the latest legislation and guidance on how the UK will implement on the one hand EU and on the other UN and domestic sanctions in the event of a no-deal Brexit. Legislation has been made under SAMLA to take effect on a no-deal Brexit in relation to Burma, […]
In the Chancellor’s Spring Statement, the Chancellor referred to the need to ensure financial regulation can adapt to a no-deal Brexit and then, longer term, to the UK’s new constitutional position.
We have written a short article on the pan-European view, and the views in certain key jurisdictions in the EU, on the effects of no-deal Brexit on the insurance regulation.
ESMA has announced that in the event of a no-deal Brexit, the Central Securities Depository (CSD) established in the UK, Euroclear UK and Ireland Ltd, will be recognised as a a third country CSD to provide its services in the EU. ESMA stated that it has adopted this recognition decision in order to allow the […]
BoE and FCA have updated their respective websites with coordinated information on their approach to a hard Brexit. BoE has published a series of materials setting out its updated plans to its supervisory approach to a hard Brexit. The papers cover: transitional relief for firms that will broadly (with exceptions) last for 15 months from exit […]
The FCA has published sector-specific information to help regulated firms ensure they are prepared for the consequences of Brexit, including a no-deal Brexit. The guidance covers banking and payments, life insurance, pensions and retirement income, general insurance, retail investment and wholesale banks, markets and asset managers.
The High Court has ruled that a European agency cannot terminate the lease of their premises at Canary Wharf on the basis of Brexit being a ‘frustrating event’. Our article provides more detail on this case and its implications.
ESMA has announced that, in the event of a no-deal Brexit, LCH Limited, ICE Clear Europe Limited and LME Clear Limited will be recognised as equivalent. The confirmation of equivalence for the purposes of EMIR follows an assessment will ensure the continued clearing of derivatives trades through these clearing houses.
FCA has announced briefings in the second week of March in both London and Edinburgh to help regulated firms prepare for Brexit. Firms can register to attend or view the live webcast.
The European Parliament has approved new rules to prohibit high charges on cross-currency payments within the EU. The new rules will mean that charges for cross-border payments in the single euro payments area (SEPA) will be aligned with charges for corresponding national payments in the national currency of the Member State in which the payment […]
Treasury has made a statutory instrument making necessary changes to the MLRs consequent on a hard Brexit. The instrument took effect on 13 February and will take effect on exit day. Among other things, the changes: remove references to any EU authority; amend references to EU legislation to state either that the reference is to […]
ESMA has published a supervisory briefing aimed at helping supervisors dealing with non-EU branches of EU firms. It highlights how the supervisors should ensure that the non-EU branch can comply with the requirements of EU legislation, and understand how the EU firm can manage the branch. While not overtly aimed at UK firms, the briefing links […]
ESMA has created a new web-page on Brexit, setting out how it is preparing for it. Its latest agreement is a MoU with BoE for recognition of CCPs and the Central Securities Depository. It aims to recognise all UK CCPs as third-country CCPs in a timely manner now the Commission has made equivalence decisions on […]
Treasury has laid before Parliament the Financial Services (Miscellaneous)(Amendment)(EU Exit) Regulations 2019. The wide-ranging instrument amends several pieces of UK and retained EU law relating to financial services, to address Brexit-related consequences. The instrument will address deficiencies in UK law that would not work after Brexit, revokes various laws that it would not be appropriate […]
Under draft legislation published by the Treasury, the FCA and the PRA are to be given temporary powers to make transitional provisions, in order to ensure that most firms and other regulated entities’ day to day UK regulatory obligations will be as unaffected by Brexit as possible. However, the FCA has published a statement setting […]
As part of the preparation for a ‘no-deal’ Brexit, the FCA has agreed MoUs with ESMA and with EU and NCAs, covering supervision, enforcement and information exchange, including in relation to credit rating agencies and trade repositories.
As part of the Brexit preparations, the BoE and ESMA have published an MoU setting out cooperation and information-sharing arrangements in relation to CCPs and CSDs. This agreement, and the adoption by the EC of temporary equivalence decisions for UK CCPs and CSDs, will facilitate continued recognition of UK CCPs and CSDs and their continued […]
FCA has set out how it proposes to use its temporary powers under the draft legislation Treasury has put forward. It plans in principle to make transitional measures that will ensure that firms do not need to prepare now to make Brexit-related changes to their business. Wherever possible, these transitional arrangements would apply. But in […]
At the World Economic Forum in Davos, the Swiss and UK governments signed a deal to allow both countries to trade freely within the insurance sector post-Brexit. The agreement will come into force when the current EU-Swiss insurance agreement ceases to apply to the UK. The agreement will replicate the effects of the existing EU-Swiss […]
Ireland and Luxembourg have both made announcements designed to give comfort to their funds that use UK based portfolio managers: The Deputy Governor of the Bank of Ireland said in a speech that it was making good progress in its preparations for a hard Brexit. These will include ensuring that consumers can continue to be […]
FMLC has written to Treasury with its key observations on the FSMA (EU Exit) Regulations. The Committee is concerned at some wording proposed in relation to the financial promotion rules. Specifically, FCA has power to make rules that apply to authorised persons in relation to communications they make or approve if rules are necessary to […]
The Treasury Committee has started a new inquiry looking at financial services in the UK after Brexit. Its focus is to look at: what the UK’s financial services priorities should be when negotiating the UK’s future trading relationships with the EU and third countries; how the sector can take advantage of the new environment, including […]
The Treasury has written to the Treasury Committee enclosing a draft of secondary legislation that would give temporary transitional powers to the UK financial regulators in the event of a no-deal Brexit that would enable firms and the financial markets to function properly while requirements stemming from EU laws are embedded into UK laws. The […]
ISDA has published an updated webpage with FAQs on the impact of Brexit on ISDA documentation.
We are delighted that Jonny Williams has joined the financial services regulatory team at Womble Bond Dickinson UK. More information on Jonny and his appointment can be found here.
FCA has published its “Sector Views” setting out its observations from monitoring its 7 selected sectors of: retail banking retail lending general insurance and protection pensions and retirement income retail investments investment management and wholesale financial markets It produces this review to inform its overall approach and ultimately its business plan. The studies identify where […]
At the end of last year, the the Treasury published draft regulations making provision for contractual certainty for firms currently passporting into the UK in the event of a ‘hard’ Brexit. Following this, the FCA has published CP19/02 on Brexit and contractual continuity. This consultation paper is aimed at such incoming firms. It consults on […]
One of the most fundamental ways in which Brexit is likely to affect many businesses, is the impact on immigration law. This is particularly the case for the financial services and insurance sectors, which have long drawn on talent from across the world. Womble Bond Dickinson (UK) LLP is putting on a series of seminars […]
FCA has opened the notification window for passporting-in firms. Firms will need to have notified FCA of their intention to seek full UK authorisation to carry on services in the UK before exit day in the event of a hard Brexit. FCA has opened the window from 7 January to 28 March, Its website includes a guide […]
FCA’s latest Policy Development Update highlights a number of publications due before the end of Q1 2019: a policy statement on general standards and communication rules for payment services and emoney providers; consultation and discussion on the investment platforms market study remedies; policy statement on 2019/20 fees and levies; consultation on recovering the costs of […]
The UK and the US signed the Bilateral Agreement between the United States and the United Kingdom on Prudential Measures regarding Insurance and Reinsurance on 18 December, although the announcement was made today by way of a joint statement from HM Treasury, US Treasury and Office of the US Trade Representative on Signing the UK-US […]
BoE has made a statement on the equivalence of the future UK legal and supervisory framework for CCPs and CSDs, following a decision by the European Commission to make implementing acts that will allow UK CCPs and CSDs to be recognised by ESMA. The measures would take effect from 30 March 2019 in the event of a […]
As part of its preparation for onshoring EU legislation, the PRA has published CP32/18. This consultation paper contains two consultations: the first sets out the PRA’s proposals regarding the PRA Rulebook and the Binding Technical Standards (BTS) that are to come within the PRA’s remit; the second relates to BTS that will come within the […]
FCA is consulting on how it proposes to make technical standards which are substantially the same as the PSD2 SCA RTS to ensure strong customer authentication and common and secure open standards of communication post-Brexit. FCA comments that some of the SCA-RTS take effect from 14 March 2019 and others not until 14 September. In […]
The EBA has issued a press release that urges firms with customers that may be affected by Brexit to be more proactive in communicating with their customers about how they may be affected. In particular customers should be told about any actions that firms have had to take as part of contingency planning that could […]
Treasury has published a draft statutory instrument setting out the Financial Services Contracts Regime (FSCR) which will provide run-off mechanisms to the various temporary regimes the government and regulators are preparing to put in place for Brexit. The regime will cover firms that currently passport into the UK under FSMA, the PSRs or the EMRs, and […]
The Home Office has updated on the first year’s progress against the UK’s anti–corruption strategy. The update concludes that the commitments made have largely been met, and that the UK is on track to deliver its remaining commitments. including those due in 2019, notwithstanding Brexit. The report highlights a number of points of interest to […]
FCA has added a page to its website updating firms on what they could and should be doing to prepare for Brexit. The page is for use by UK and EEA firms and takes them through each various practicality they should consider.
The US Department of the Treasury and Office of the US Trade Representative have confirmed their intention to sign a bilateral agreement on prudential measures on insurance and reinsurance which is consistent with the current US/EU agreement. The intention is to cater for ongoing relationships post-Brexit.
The Competition and Markets Authority (CMA) is consulting on its proposed Annual Plan, which sets out its plans and priorities for 2019 to 2020. Subject to the outcome of the Brexit negotiations, the CMA plans to give greater priority to potential market studies and investigations as it considers future work. The themes which it proposes should carry […]
FMLC has noted a number of legal uncertainties in the various draft onshoring legislation relating to investment funds and their managers. In relation to the drafts for AIFMs and Collective Investment Schemes, FMLC has spotted issues with: references to other legislation – and conflict between pin-pointed dates on which terms take effect; the temporary recognition […]
The Treasury Committee has published the Bank of England’s analysis of the Withdrawal Agreement and Political Declaration. The lengthy document explains how the reduction in openness with reduce the UK economy’s productive capacity and generally its short-term rate of growth – and how a disorderly Brexit will exacerbate this. It also notes that the longer-term […]
BoE has published its latest Financial Stability Report together with the results of the 2018 Stress Tests. The Financial Stability Report found that the UK financial system has good resilience to a range of risks, including Brexit – banks could lend in a scenario more severe than the financial crisis and are prepared and strong […]
As part of the preparation for a ‘hard’ Brexit, the Treasury has published a Policy Note that accompanies a draft Bill covering in-flight financial services legislation, currently progressing through Parliament. The Policy Note comments that in scope of the Bill are pieces of EU legislation agreed or in negotiation at the point of exit, with implementation […]
On 22 November 2018, DExEU published the Draft Political Declaration setting out the framework for the future relationship between the United Kingdom and the European Union (“Draft Declaration“). The Draft Declaration puts forward proposals for the future working relationship between the EU and the UK, including a new framework for the financial services market.
On 22 November 2018, Treasury announced it was developing a draft SI for MAR. It proposes that the SI will address: the scope of the regulation; transaction reporting; notification requirements; transfer of functions; and supervisory cooperation and information sharing Treasury also published the Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit) Regulations 2019; a […]
On 20 November 2018, Germany’s Federal Ministry of Finance announced that it had prepared draft legislation to provide continuity of business for UK insurers and banks. The draft legislation referred to as “Draft Act Supplementing the Act on Tax-Related Provisions concerning the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the […]
ESMA has released a Public Statement on how central clearing is to be addressed in the event of a no-deal Brexit. ESMA supports continued ability to access UK CCPs and has therefore welcomed the decision to adopt a temporary and conditional equivalence decision. It is now working to plan for recognition of UK CCPs in […]
The first Commencement Order under the Sanctions and Anti-Money Laundering Act 2018 has been made. It brings into force the majority of the sanctions provisions in the Act that enable Ministers to make and implement sanctions. The rest of the Act, including the repeal of existing legislation, will be the subject of a separate Order, […]
FCA has published additional proposals on how it will deal with a hard Brexit. The consultation focuses on: more changes to the Temporary Permissions regime; reflecting the new Credit Rating Agency and Trade Repository Regime in the Handbook and FCA’s approach to guidance and forms Key elements of the consultation include: new “cross-cutting” issues that […]
In readiness for the UK’s departure from the European Union, Treasury has published further draft statutory instruments including: Financial Services (Distance Marketing) (Amendment) (EU Exit) Regulations 2019: amending the Financial Services (Distance Marketing) Regulations 2004 by removing references to EU/EEA bodies, territories and instruments and replacing the references to the European Consumer Credit Information Form […]
The Department for Exiting the EU published a press statement alongside the announcement on 14 November that the UK and EU negotiating teams had reached an “in principle” agreement on the Withdrawal Agreement and an outline of the Political Declaration on the future relationship. It also published the draft agreement, outline declaration and joint statement. […]
The Foreign Affairs Committee in the Commons has launched an inquiry on the future of UK sanctions policy. Given SAMLA’s Royal Assent, the Committee is to look at different options for the UK’s sanctions policy post-Brexit. It is calling for written submissions on several elements of sanctions regimes, including views on the advantages and disadvantages […]
FCA has outlined how its temporary permissions Brexit regime will work for inbound EEA firms and funds. FCA carried out a survey earlier in the year for affected firms and funds, and urges relevant firms to complete it if they have not yet done so. The new webpage sets out which firms and fund can […]
ESMA has published a report with draft RTS that would amend the 3 Commission Delegated Regulations on EMIR. ESMA is proposing a limited exemption that would facilitate novation of certain non-centrally cleared OTC derivatives to EU counterparties for a specific time-window in the event of a no-deal Brexit. The proposals would allow novation without triggering the […]
The PRA has issued a direction that confirms the process, including timings, for notifications by incoming EEA firms that wish to continue operating in the UK after Brexit (in the event of no applicable transitional agreement being in place).
EIOPA has issued a call to action for insurance firms to take steps in good time to ensure they will be able to continue to service policyholders in the event of the UK withdrawing from the EU without an agreement. It notes that UK (and Gibraltar) insurance entities who have cross-boarder insurance contracts should write to […]
PRA has updated its “approach” documents in relation to banking and insurance supervision. Key changes to the previous versions include: an update on the changes to supervisory approach following implementation of the SMR and SIMR (and, in the case of insurers, looking forward to the SIMR changing to the SMCR at the end of the […]
As part of its preparation for the contingency of a ‘hard’ Brexit, HM Treasury has published draft onshoring legislation relating to: Payment accounts Financial markets infrastructure insolvency Central securities depositories and Investment funds and managers The changes made under these SIs are unlikely to take effect if an implementation period is agreed.
Bank of England communications on approach to financial services legislation under EU (Withdrawal) Act
The Bank of England has published a package of documents covering various aspects of contingency measures required in the event of there being no applicable Brexit transition period agreed. The publications include: ‘Dear CEO’ letters from the PRA to all PRA authorised and regulated firms and incoming EEA firms, and from Bank of England to […]
The Bank of England is consulting on the proposed fee for applications for non-UK CCPs that will seek UK recognition both before and after Brexit. Comments and feedback on all aspects of the proposal are sought by 2 January.
The European Banking Authority (EBA) has published its work programme, setting out its main objectives, priorities and deliverables for 2019. The EBA’s 5 strategic areas for 2019 include to: lead the Basel III implementation in the EU; understand the risks and opportunities arising from financial innovation; collect, disseminate and analyse banking data; ensure a smooth relocation of the EBA […]
HMT has published the latest set of Brexit transition draft and updated draft SIs to be made under the EU Withdrawal Act 2018 in the event of a ‘hard’ Brexit, and accompanying explanatory notes. These cover: Central Securities Depositories Over the Counter Derivatives, Central Counterparties and Trade Repositories Financial Conglomerates and Other Financial Groups (explanatory […]
As part of its Brexit preparations, the FCA has updated its webpage for incoming trade repositories that wish to ensure they can continue to do business in the UK following Brexit. Firms are now able to complete draft application forms for registration as a trade repository. The FCA has also published guidance notes for this […]
The FPC met on 3 October. At the meeting, it continued to assess the risks Brexit presents to the UK financial services sector, noting there had been considerable progress in the UK to address the risks, but not much in the rest of the EU, such that companies no longer have time to mitigate all […]
Treasury has published some new draft statutory instruments to be made under the EU (Withdrawal) Act, or announced plans to make them, and also updated existing drafts. New or updated documents include Regulations on : plans for the Solvency II and Insurance measures Bank Recovery and Resolution Credit Rating Agencies (FCA has also published an […]
As heralded at the end of last year, the FCA has now published two consultation papers that make provision for operations in the event of a ‘hard’ Brexit next March. The first consultation sets out changes to the FCA’s Handbook and to those EU Binding Technical Standards, which, it is proposed, would be incorporated directly […]
Treasury has set out its plans for a temporary transitional tool for the UK regulators to use that will enable them to phase in the requirements for UK firms that will change under the raft of onshoring legislation consequent on Brexit. The EU Withdrawal Act provides the enabling powers for Treasury to make the various […]
The LMA’s recent bulletin, which was published on 2 October 2018, provided the Lloyd’s community and its members with: (i) new model clauses for EEA and non-EEA risks placed with Lloyd’s Brussels; (ii) suggested wording for “Brexit affected policies”; and (iii) treaty exclusion wording for outwards reinsurance placed with Lloyd’s Brussels. New model clauses The […]
Steven Maijoor has spoken on the state of implementation of MiFID 2 and preparing for Brexit. He focussed on the impact of MiFID 2 on non-EU trading venues – in particular looking at the impact of the trading obligation and on secondary markets and transparency. He looked also at the role and increase in market […]
ESMA has published its 2019 work programme. As ever, its top priority is supervisory convergence. It will be working particularly on prospectuses, investment funds and MiFID 2 as well as cross-cutting supervisory themes. Of course, all activities will consider Brexit. It also plans to work on improvement of data quality and risk monitoring and further […]
Charles Randell, speaking at AFME’s conference, highlighted the damage that a cycle of deregulation, crisis and regulation can do. He discussed in particular the risks of deregulation, or the choice not to apply regulation to something innovative, thus encouraging business into that area – which often then leads to a scandal and then the introduction […]
ESMA has written to the European Commission on various issues which are relevant in the context of Brexit but also to third-countries generally. There has already been discussion on the MiFID 2/MiFIR requirements on trading venues, and this letter now addresses: how MiFIR treats third country firms providing services and activities to ECPs and per […]
The Treasury is not planning to include EEA market operators in the proposed arrangements enabling incoming firms and businesses to continue to operate immediately after Brexit. Accordingly if EEA market operators are no longer able to rely on MiFID II passporting rights (eg because a transitional deal is not agreed), they may need to have […]
European Parliament resolution on the relationships between the EU and third countries concerning financial services regulation and supervision
The European Parliament has voted in plenary to adopt a resolution on regulatory and supervisory relationships between EU and third countries. In addition, it published a provisional edition of the resolution. In summary, the resolution contains recommendations relating to the equivalence framework in financial services legislation, including that: equivalence decisions should be objective, proportionate, and risk-sensitive, while […]
Treasury and the BoE have announced that Mark Carney is to carry on in his role as Governor of the Bank until 31 January 2020, an extension of 7 months to his originally agreed term, while Sir Jon Cunliffe, deputy-governor with responsibility for financial stability, has also been reappointed.
The FCA has held its annual public meeting, at which it reviews the year past, talks about key priorities for the year ahead and takes questions from the public. Charles Randell, who was chairing his first Annual Public Meeting, opened the meeting by: noting that the demands of Brexit preparation meant that they were forced […]
The Joint Committee of the European Supervisory Authorities (ESAs) published its latest report on the risks and vulnerabilities in the EU financial system (JC 2018 34). The autumn report highlights the following risks as potential sources of instability: abrupt yield increases could generate substantive asset price volatility and lead to losses across asset classes; repricing of risk […]
Treasury has published further drafts of Brexit-related statutory instruments: the EEA Passport Rights (Amendment, etc, and Transitional Provisions)(EU Exit) Regulations 2018 address the necessary amendments to legislation to repeal passport rights under single market directives consequent on Brexit and legislates for the temporary permissions regime for those who will lose any passports; the draft Payments […]
The Committee on Economic and Monetary Affairs has published a report on relationships between the EU and third countries on financial services regulation and supervision. The report calls for a Resolution requiring the Commission to review how current equivalence decision procedures work, to provide greater and clearer transparency, and says there is a clear move […]
Treasury has published guidance for the banking, insurance and other financial services sectors on the impact of what it still describes as an “unlikely” no-deal Brexit scenario. It stresses that increased preparations towards a no-deal were always likely to be necessary the closer Brexit becomes and that accelerating the plans does not mean the Government […]
The latest draft Regulations anticipating Brexit relate to capital resources requirements. The draft Capital Requirements (Amendment)(EU Exit) Regulations 2018 are intended to make sure the CRR can continue to operate effectively once the UK has left the EU. Key changes the draft addresses relate to: group consolidation so as to amend the geographical scope of […]
The UK Government has published a presentation (dated 25 July) that sets out a proposed ‘Framework for the UK-EU partnership’, as part of the preparations by the UK Brexit negotiating team. This document sets out a proposed model, that would be based on the principle of autonomy, including autonomous judgement over market access, legislation and […]
The European Central Bank (ECB) has published the latest edition of its Supervision Letter. The August edition includes a recording of an interview with Ed Sibley, Deputy Governor of the Central Bank of Ireland and ECB Supervisory Board member, discussing the importance of all forms of diversity to the governance, culture and risk profile of banks. In […]
The FCA has published a Dear CEO letter on cross border booking arrangements. In its letter, the FCA acknowledges that, in order to deal with the UK’s withdrawal from the EU, firms have put in place contingency plans which when executed will impact current business models, legal entity strategies and booking arrangements. The FCA appreciates the […]
FMLC has published a report looking at contract continuity post-Brexit and highlights the legal uncertainties that will continue if there is no clear agreement on the UK/EU relationship. The paper, which reprises many views FMLC has already expressed, also looks at how not only legislation but also firms can take measures to mitigate the risks.
We have written an article setting out the detail of the Sanctions and AML Act.
FCA has published its Annual Report and Accounts for 2017/18. The report includes details of: FCA’s work preparing for Brexit; key regulatory changes such as MiFID 2 and PSD 2; work on SMCR extension; thematic work on high cost credit and consumer debt; and the PPI customer information campaign. It also articulates what FCA has done […]
Nausicaa Delfas has spoken on the FCA’s approach to Brexit. She looked at how it is preparing and forward to the future. She stressed that FCA is working hard with the Government and other regulators to ensure the smoothest transition possible and promised highly integrated markets in the future regardless of the Brexit outcome. FCA […]
Treasury has published a draft statutory instrument setting out changes to consumer credit legislation consequent on Brexit. The draft has not yet been laid before the relevant parliamentary committees for “sifting”. Once the Committees are ready, it will be laid appropriately. Treasury will need to amend the following legislation to address situations where retained EU […]
Treasury Committee asks PRA to work with insurance industry in relation to areas covered by Solvency II
In a letter to the Chief Executive of the PRA regarding Solvency II, the House of Commons Treasury Committee has asked the PRA to consider challenges raised by industry in a number of areas, including to the current risk model change process and reporting requirements. Furthermore, in the light of Brexit and while acknowledging it […]
FCA’s latest Policy Development Update shows plans for consultations on fees for claims management companies and for recovering the costs of OPBAS due over the next couple of months, and policy proposals for regulatory fees and levies for 2018/19 due in October. It notes these will address onshoring ESMA regulatory functions after Brexit.
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 […]
EBA has published an Opinion in which it asks national regulators to ensure financial institutions are taking practical steps to prepare for a “no deal” Brexit with no transition period. It does not think institutions have been moving quickly enough in their planning and is concerned they are delaying triggering necessary actions. EBA notes that […]
HM Treasury has published a speech by Philip Hammond, Chancellor of the Exchequer, which was delivered at the annual Mansion House dinner. In his speech, Mr Hammond focused on Brexit and financial services. He said that the UK needs to ensure that it remains a world leader in innovation, and extend London’s position as the […]