FCA announces extension of temporary transitional power

Following the extension of Article 50, the Financial Conduct Authority is to extend the proposed duration of the directions issued under the temporary transitional power to the end of December 2020.

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.

Nausicaa Delfas, executive director of International at the FCA said the temporary transitional power is a key part of the watchdog’s own contingency planning if the UK leaves the EU without an agreement and should give firms the time they need to phase in any regulatory changes they may need to make as a result of ‘onshored’ EU legislation.

“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.”

The FCA has said it 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).

Other than the additional time, the FCA said its approach remains unchanged.

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