On 22 November 2018, HM Treasury published Explanatory Information on the draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (the “Draft FSMA Regulations“).
The Draft FSMA Regulations will make amendments to the Financial Services and Markets Act 2000 (“FSMA“) and related legislation to ensure that the UK’s financial services framework continues to operate effectively in a “no deal” scenario. The statutory instrument that will implement the regulations is still in development, but HM Treasury has confirmed that it intends to lay it before Parliament ahead of Brexit, although the changes would not take effect on 29 March 2019 (“exit day“) if there is an implementation period as part of the deal.
Key changes that the Draft FSMA Regulations will make in a “no deal” scenario include:
- Approved persons/senior managers: the regulations will remove exemptions for EEA firms from elements of the Approved Persons Regime and Senior Managers & Certification where responsibility for that element falls to the EEA home regulator. EEA firms would instead be subject to the same framework as non-EEA firms.
- Part VII business transfers: FSMA provisions permitting transfers of insurance business from the EEA to the UK or from the UK to another EEA state will be revoked. This will be subject to a saving provision for firms who have already initiated a transfer (which will require the firms to have paid the PRA transaction fee and had an independent expert appointed before exit day).
- FCA and PRA supervision and enforcement: binding obligations on the UK regulators to consult with EU authorities in connection with changes of control over authorised firms and enforcement actions will be removed (although the UK regulators would retain a statutory ability to co-operate on a discretionary basis).
- Consequential amendments to regulated activity definitions, including in connection with the proposed “temporary permissions regime”: the regulations will make various amendments to definitions relating to regulated entities, activities and permissions, working in conjunction with the proposed temporary regime that will allow EEA firms operating in the UK via a passport to continue their activities for a limited period after exit day (see our separate blog post here).
Read more here.