With the transition period coming to a close and no certainty of any form of agreement, both the FCA and firms have had their work cut out for them when it comes to planning.
Today, the FCA has released two items that will give firms far greater clarity on how to move forwards in the coming months.
The two developments are that:
The content of the new FCA Handbook has been released, including all changes so far.
Flexibility will be granted to allow firms to transition to the new rules until 31 March 2022.
The process of 'onshoring' EU Regulation into UK legislation and the FCA Handbook means that there will be some areas where requirements on your firm will have changed and so both of these development will be useful even if they cannot yet reveal the complete picture.
To view the updated text of the Handbook, users just need to visit the FCA Handbook website use the time travel function. Normally this is used to review past regulation but it will now present the future, post Brexit version of the Handbook.
Alternatively, if you would like to see a full list of the Handbook modules affected, refer to Annex B to the main FCA transitional directions.
The changes include all amendments required by EU exit-regulations up to 30 September 2020 and more changes will occur over the coming months, and should be finalised by December. For other changes, not yet implemented, you may wish to view the FCA's latest Quarterly Consultation Paper.
Flexibility in transitition
To help firms adapt to any new requirements, the Treasury has given the UK financial regulators the power to make transitional provisions to financial services legislation for a temporary period. This is known as the Temporary Transitional Power (TTP).
The FCA is using this power to allow firms flexibility in choosing to apply either the new or pre-existing rules until 31 March 2022. This is the default position the regulator is taking although there are some key areas where it will not be allowing this flexibility:
The FCA expects firms to proactively use the temporary flexibility to prepare so that they they will be fully compliant with the new rules by 31 March 2022. This includes PRIN, GEN, MIPRU, IPRI(INV), COBS, ICOBS, MCOB, BCOBS, CASS, MAR, SUP, COMP, COLL, CONC, FUND, LR, PRR, DTR.
Changes that are needed now
In some key areas, the FCA expects firms to be preparing to comply with changed obligations ready for 31 December 2020. These are:
MIFID II transaction reporting
EMIR reporting obligations
SFTR reporting obligations
Certain requirements under MAR
Contractual recognition of bail-in
Client Assets Sourcebook requirements (CASS)
Market-making exemption under the Short Selling Regulation
Use of credit ratings for regulatory purposes
Electronic commerce EEA firms
Mortgage lending after the transition period against land in the EEA
Payment Services – strong customer authentication and secure communication