In Focus Consumer Credit
Regulator outlines its use of temporary transitional power
The Financial Conduct Authority has offered guidelines of how it expects firms to prepare for Brexit
Nausicaa Delfas Executive director of international, the Financial Conduct Authority
Last month we set out how we would use the temporary transitional power in the event the UK leaves the EU without an agreement.
Minimise disruption The Treasury has put forward draft legislation that would temporarily empower UK regulators to make transitional provisions if the UK leaves the EU without a withdrawal agreement. This is intended to minimise the disruption for firms and other regulated entities in this scenario. The temporary transitional power would
give the FCA the ability to delay or phase in changes to regulatory requirements made under the EU (Withdrawal) Act 2018 (the legislation that has enabled the ‘onshoring’ of EU legislation and rules into the UK rulebook) for a maximum of two years from exit. We intend to make use of this power to
ensure that firms and other regulated persons can generally continue to comply with their regulatory obligations as they did before exit. This will enable firms to adjust to post-
exit requirements in an orderly way. There will be some areas where it would
not be consistent with the FCA’s statutory objectives to grant transitional relief using the temporary transitional power. In these areas only, firms, and other
regulated persons as identified below, should begin preparing to comply with the
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changed obligations now, if there is no implementation period.
Contingency planning The temporary transitional power is an important part of our contingency planning. In the event that the UK leaves the EU
without an agreement, it gives us the flexibility to allow firms and other regulated persons to phase in the regulatory changes that would need to be made as a result of ‘onshored’ EU legislation. This will give firms certainty, ensure continuity, and reduce the risk of disruption. There are some areas, such as reporting
The temporary transitional power would give the FCA the ability to delay or phase in changes to regulatory requirements made under the EU (Withdrawal) Act 2018 (the legislation that has enabled the ‘onshoring’ of EU legislation and rules into the UK rulebook) for a maximum of two years from exit
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rules under MiFID II, where it would not be appropriate to provide a phase-in, as receiving these reports is crucial to our ability to ensure market oversight and the integrity of financial markets. In these areas only, we expect firms and
other regulated persons to begin preparing to comply with the changes now. The following firms or persons should
begin to prepare to comply with changes now: l Firms that are subject to the MiFID II transaction-reporting regime, and connected persons, for example approved reporting mechanisms. l Firms subject to reporting obligations under European Market Infrastructure Regulations. l EEA issuers that have securities traded or admitted to trading on UK markets.
March 2019
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