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Brexit Action for Regulated Firms

Brexit Action for Regulated Firms: Is your Firm Prepared?

12th August 2019

Last month the FCA updated their webpage, ‘Preparing your firm for Brexit’ with a document that helps to question firms over their preparedness for Brexit.

The latest update to the FCA’s Brexit webpage provides a new document for Firms entitled ‘Is your firm prepared for Brexit?’

Is your Firm prepared for Brexit?

This FCA document provides an overview of the issues the FCA expects regulated firms to have considered in their Brexit preparations, including planning for a no-deal Brexit on 31st October 2019.

As the UK prepares to leave the EU, the FCA advises that regulated firms should have considered “if or how they will be affected and what action they may need to take.”

UK Firms: Considerations

Firms that are UK-based and who only do business within the UK may be less directly affected than others and, in some instances, perhaps won’t be affected at all.

However, for those UK firms that carry out business with the European Economic Area (EEA), whether through a passport or directly under EU legislation, will be affected. Thus, the regulator informs that these firms should have plans in place now to address any risks the firm may face.

Firms can read about how Brexit may affect them and view those issues the FCA expects all firms to be aware of which includes:

• Passporting
• Changes to legislation in the UK
• Temporary transitional power
• Data sharing
• How customers may be affected
• How to communicate with customers
• When to contact customers

In addition the FCA’s Brexit page also help provides an overview of Considerations for EEA firms conducting business in the UK including upon the:

• Temporary permissions regime; and
• Financial services contracts regime (FSCR)

Action for Regulated Firms:

The FCA expects that firms should complete their assessment of the extent to which Brexit affects them and if a firm concludes that they are affected, then they should:

• Work out and plan for implementation of the changes that your firm might have to make to its business.
• Think about any information your firm will need to give to customers who might be affected by your firm’s plans and how you will provide it in a way which is clear, fair and not misleading.
• Continue to consider the implications of a range of possible scenarios including the potential absence of any implementation period.

Whilst the Brexit negotiations are of course a matter for Government, the FCA advises it will follow them closely and provide further information when possible. Therefore firms should regularly check the FCA’s website for further updates to remain abreast of any regulatory issues that may be affected.

In the meantime, the BOE and the PRA are consulting upon changes following extension of Article 50. The PRA published a consultation paper PRA CP18/19 relating to the UK withdrawal from the EU that covers some minor amendment needed to the Banking regulator’s EU Exit Instruments due to the extension of the Article 50 period and change to the exit day, it now being 31 October 2019. The PRA’s consultation in this regard closes on 18 September 2019.

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.