Financial Conduct Authority
Updates to the FCA’s directions under the Temporary Transitional Power
The Financial Conduct Authority (FCA) yesterday updated and published draft directions under its Temporary Transitional Power (TTP). The TTP gives the FCA flexibility in applying post-Brexit requirements, allowing firms to transition to a new UK regulatory framework. The directions would only come into effect on exit day if the UK leaves the EU without an implementation period.
Under the directions, firms do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit. However, in some cases where the FCA considers it important for its objectives, it expects firms to take reasonable steps to comply with post-exit obligations from exit day, for example in relation to key reporting obligations. The FCA set out its approach in its February statement.
The draft directions published yesterday under the TTP update the directions made on 28 March 2019. Alongside this the FCA also updated its explanatory note providing guidance on the use of the TTP. The draft directions are being published now to give firms time to consider changes which may apply, before they are finalised.
The main updates relate to the following areas:
- extending the proposed duration of the directions issued under the TTP from 30 June 2020 to 31 December 2020
- updating the provisions relating to prudential requirements in our directions to reflect new HM Treasury legislation and FCA exit instruments published since 29 March 2019. Our policy approach has not changed
- revoking certain directions in relation to payment services, provided by EEA credit institutions in the financial services contracts regime, as these are no longer needed because of legislative amendments made by the Government
- applying a standstill direction to allow EEA Central Banks and the European Central Bank to continue to rely upon their status as exempt persons until 31 December 2020
Nausicaa Delfas, Executive Director of International at the Financial Conduct Authority, yesterday said:
“The Temporary Transitional Power is intended to reduce the risk of disruption for firms in a no-deal scenario while ensuring consumers remain appropriately protected and markets continue to work well. It forms part of the extensive work the FCA has been doing to prepare for Brexit. It gives firms and other regulated persons time – to December 2020 – to phase in any regulatory changes they may need to make as a result of 'onshored' EU legislation.
“However, as we said in February 2019, there are specific areas where we will not be granting transitional relief and, in these areas, we continue to expect firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by exit day.”
The FCA does not expect to make significant changes to the draft directions in advance of exit day. Firms can contact us on the impact of the use of the TTP to make us aware of any specific changes that they believe are not fully accounted for.
Notes to Editors
- Read the FCA's February 2019 Brexit statement on what we expect firms and other regulated persons to do.
- Read the FCA's July 2019 press release announcing its extension to its use of the temporary transitional power.
- Read the Bank of England's Consultation Paper about UK withdrawal from the EU(link is external).
- View our new draft directions.
- The areas where firms will have to make changes on exit day are:
- firms subject to the MiFID II transaction reporting regime, and connected persons (for example approved reporting mechanisms)
- firms subject to reporting obligations under European Market Infrastructure Regulations (EMIR)
- EEA Issuers that have securities traded or admitted to trading on UK markets
- investment firms subject to the Bank Recovery and Resolution Directive (BRRD) and that have liabilities governed by the law of an EEA State
- EEA firms intending to use the market-making exemption under the Short Selling Regulation
- firms intending to use credit ratings issued or endorsed by FCA-registered credit ratings agencies after exit day
- UK originators, sponsors, or securitisation special purpose entities (SSPEs) of securitisations they wish to be considered simple, transparent, and standardised (STS) under the Securitisation Regulation
- Find out how you can prepare for Brexit.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA). On 1 April 2014, the FCA took over responsibility for consumer credit regulation.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.
Latest News from
Financial Conduct Authority
FCA acts to protect those buying motor finance16/10/2019 14:10:00
The Financial Conduct Authority (FCA) yesterday announced plans to ban the way in which some car retailers, and other brokers in the motor finance sector, receive commission.
The FCA fines Tullett Prebon £15.4 million14/10/2019 16:25:00
The Financial Conduct Authority (FCA) has fined Tullett Prebon (Europe) Limited (Tullett Prebon) £15.4 million for failing to conduct its business with due skill, care and diligence, failing to have adequate risk management systems and for failing to be open and cooperative with the FCA.
FCA sets out latest expectations for firms on Brexit11/10/2019 16:20:00
The FCA and regulated firms have been taking steps to prepare in the event the UK leaves the EU on 31 October 2019 without a deal. Today the FCA has issued an update on steps certain firms need to take.
FCA urges remaining victims of Churchgate Trading Syndicate to get in touch09/10/2019 10:25:00
The Financial Conduct Authority (FCA) urges members of the public who lost money in an unauthorised scheme called the Churchgate Trading Syndicate and who may be eligible to receive some of their money back, to get in contact with the FCA.
FCA sets out potential remedies to tackle concerns about general insurance pricing07/10/2019 11:10:00
The FCA has published the interim report of its market study into the pricing of home and motor insurance.
FCA urges victims to come forward after getting confiscation order against three individuals03/10/2019 14:20:00
Southwark Crown Court has made confiscation orders against Samrat Bhandari, Muhammad Mirza and Paul Moore, following their earlier convictions and prison sentences for running an illegal investment scheme that lost investors over £1.4 million.
FCA fines Prudential £23,875,000 for failures relating to non-advised annuities sales02/10/2019 12:25:00
The Financial Conduct Authority (FCA) recently (30 September 2019) fined The Prudential Assurance Company Limited (Prudential) £23,875,000 for failures related to non-advised sales of annuities.
FCA confirms new rules for certain open-ended funds investing in inherently illiquid assets01/10/2019 10:25:00
The Financial Conduct Authority (FCA) yesterday confirmed new rules which apply to certain types of open-ended fund investing in inherently illiquid assets such as property. The new rules apply to these funds, known as non-UCITS retail schemes (NURSs), but will not apply to other types of fund, such as UCITS, which are already subject to restrictions relating to such assets.
Further details of Independent Investigation of Connaught Income Fund Series 1 announced30/09/2019 10:25:00
Raj Parker has announced that the independent investigation into the approach to, implementation and oversight of the Connaught Income Fund Series 1 (the Fund) is now up and running and is inviting affected individuals to get in touch.