The Financial Conduct Authority (FCA) has issued two further consultations to help firms prepare for the UK’s exit from the European Union (EU).
Consultation paper CP19/2 contains proposals to implement the Financial Services Contracts Regime (FSCR) so that EEA firms can fulfil their existing contractual obligations in the UK. The FSCR allows EEA firms to run off their regulated business in the UK, if the UK leaves the EU without an implementation period. Members may access CP19/2 by clicking here.
The consultation paper sets out details of the FSCR and the rules the FCA proposes should apply to firms during the regime. The FSCR allows for the continuity of existing contracts after exit day for EEA firms which either:
- do not enter the temporary permissions regime (TPR), or
- exit the TPR without full UK authorisation.
The FCA said that allowing contracts to continue is important for protecting UK consumers and minimising market disruption.
The FSCR does not allow EEA firms to take on new business after 29 March 2019. Similarly, EEA-based managers, depositaries and trustees of UK authorised funds cannot continue to manage or provide services to these funds after exit day under FSCR. These firms and fund managers will need to enter the TPR.
The FSCR will be time-limited depending on the type of regulated activity being performed. It will apply for a maximum of five years for all contracts except for insurance contracts and for a maximum of 15 years for those contracts. The Treasury can extend these periods, if necessary, based on a joint assessment by the FCA and the Prudential Regulation Authority.
The consultation period on CP19/2 closes on 29 January 2019.
Consultation paper 19/1 sets out proposals for recovering the costs of regulating securitisation repositories (SRs) after the UK leaves the EU.
Members may access CP19/1 by clicking here
Consultation on CP19/1 closes on 11 February 2019. The FCA said it had set a shorter deadline on this occasion so that the rules can be in place by 29 March 2019, and recognising that there is a limited number of firms that will be setting up SRs. The FCA will publish the final rules in a Handbook notice in March 2019.
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