FCA confirms Brexit passporting rules

FCA confirms Brexit passporting rules

The regulator has confirmed firms will be able to operate under a transitional arrangement following the UK’s exit from the European Union.

In a statement on 20 December the Financial Conduct Authority (FCA) said it expects firms will be able to benefit from passporting between the UK and EEA after the point of exit and during the implementation period. 

On 15 December the European Council confirmed sufficient progress had been made to move to the second phase of negotiations related to transition (the ‘implementation period’) and the framework for the future relationship between the UK and the EU.

The FCA said it welcomed the progress and was supportive of open markets and free trade in financial services.

It also welcomed the intention to provide for an implementation period to ensure a smooth and orderly exit of the UK from the EU, albeit the final nature of this was yet to be agreed, it stated.

On 20 December the Treasury said the government would legislate for a temporary permissions regime if necessary.

This would enable firms and funds to undertake new business within the scope of their permission and to continue performing their duties, manage existing business and mitigate risks from a sudden loss of permission. 

The FCA said UK-regulated firms and funds would need to notify the FCA before exit day if they want to benefit from temporary permission but they would not need to re-apply for authorisation.

The FCA will continue to cooperate closely with the home state regulators of EEA firms and the European supervisory authorities, it said.

Firms based in the UK servicing clients in the EEA should continue to prepare for a range of scenarios meanwhile and should discuss these with the relevant EU regulator, it added.

The Treasury also said it would provide the FCA with functions and powers in relation to UK and non-UK credit rating agencies and trade repositories. 

The FCA will set out further details of its approach in the New Year.