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FCA reminds firms to be ready for the end of the transition period with one month to go

Dec 3, 2020 | Brexit, FCA

Link(s): https://www.fca.org.uk/news/press-releases/1-month-go-fca-reminds-firms-be-ready-end-transition-period

Context

The FCA has issued a reminder to firms to ensure that they are ready for when the transition period ends at 11pm on 31st December 2020. Firms will need to be prepared for a number of regulatory changes, some of which do not benefit from the Temporary Transitional Power (TTP). https://www.fca.org.uk/brexit/onshoring-temporary-transitional-power-ttp

Key points to note

  • The FCA is making use of the Temporary Transitional Power (TTP) to provide it with more time to comply with the large number of changes  
  • The TTP gives the FCA flexibility as to how and when changes to its rules apply following the end of the transition period, allowing firms to transition to the new regime. Where it applies, the TTP means that firms and other regulated persons can continue to comply with their existing requirements for a limited period.
  • The FCA intends to apply the TTP on a broad basis from the end of the transition period until 31st March 2022. This means firms and other regulated persons do not generally need to prepare now to meet the changes to their UK regulatory obligations brought about by onshoring.
  • The key requirements a firm needs to comply with by 1st January 2021 can be found here  https://www.fca.org.uk/brexit/onshoring-temporary-transitional-power-ttp/key-requirements-firms and include
    • MIFID II transaction reporting
    • EMIR reporting obligations
    • SFTR reporting obligations
    • Certain requirements under MAR
    • Issuer rules
    • Contractual recognition of bail-in
    • Client Assets Sourcebook requirements (CASS)
    • Market-making exemption under the Short Selling Regulation
    • Use of credit ratings for regulatory purposes
    • Securitisation
    • Electronic commerce EEA firms
    • Mortgage lending after the transition period against land in the EEA
    • Payment Services – strong customer authentication and secure communication
  • Passporting will end on 31st December 2020. 
  • The Temporary Permissions Regime (TPR) will allow relevant firms which passport into the UK to continue to do so, providing the FCA has been notified no later than 30th December 2020. https://www.fca.org.uk/brexit/temporary-permissions-regime-tpr
  • Notifications under TPR should be submitted via Connect
  • Any firms which currently passport or provide services to, or from, the UK and wish to cease doing so at the end of the transition period must ensure the right outcomes for customers and communicate with customers in a timely fashion to allow them to make appropriate decisions.

Next actions

Firms captured by the key requirements with a deadline of 31st December 2020 should review their processes and procedures to ensure compliance.