The FCA intends to extend the proposed duration of the directions issued under the temporary transitional power to the 31 December 2020 in the event of a no deal Brexit.
The regulator says this is to reflect the extension of Article 50 but other than the time extension its approach “remains unchanged” from the position it outlined in February this year.
The temporary transitional power is intended to minimise disruption for firms and other regulated entities if the UK leaves the EU without a withdrawal agreement.
Under the power firms do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit.
FCA executive director of international Nausicaa Delfas says: “The temporary transitional power is a key part of our contingency planning if the UK leaves the EU without an agreement.
This extension should give firms and other regulated persons the time they need to phase in any regulatory changes they may need to make as a result of ‘onshored’ EU legislation. The power will provide certainty, ensure continuity and reduce the risk of disruption.
“As we said in February, there are some areas where it would not be appropriate to phase in the changes. For example, reporting rules under Mifid II as receiving these reports is crucial to our ability to ensure market oversight and the integrity of financial markets. In these few areas only, we still expect firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by exit day.”
In his first speech as new prime minister, Boris Johnson said: “We will come out of the EU on 31 October”.
He said: “Because in the end, Brexit was a fundamental decision by the British people that they wanted their laws made by people that they can elect and they can remove from office.
“And we must now respect that decision, and create a new partnership with our European friends – as warm and as close and as affectionate as possible.”
But he said it is vital to also prepare for the “remote possibility” we are forced to come out of the EU with no deal.
Addressing those who “continue to prophesy disaster,” Johnson admitted there will be “difficulties” but said he believes “that with energy and application” they will be “far less serious” than some have claimed.
He added: “But if there is one thing that has really sapped the confidence of business over the last three years, it is not the decisions we have taken – it is our refusal to take decisions.”
For areas where the FCA will not be granting transitional relief the regulator said it expects affected firms to use the additional time between now and the end of October to prepare to meet these obligations.
If firms are not ready to meet these obligations in full, the FCA says it will expect to see “evidence of why this was not possible”.
The regulator will publish further information before exit day on how firms should comply with post-exit rules. The extension is aligned with the end date intended by the Bank of England and the Prudential Regulation Authority (PRA).