The Bank of England has today published a package of materials updating firms on our regulatory and supervisory approach in relation to our work on EU withdrawal. Today’s package builds on our previous engagement with firms on their preparations around EU withdrawal, and acts as a contingency for a scenario in which the implementation period, which has been agreed in principle as part of the UK’s Withdrawal Agreement with the EU, does not take effect on 29 March 2019. It reflects close coordination between the Bank and the FCA whose package of communications has also been released today.
Today’s package of communications does three things:
- First, it confirms our intention to provide firms with broad transitional relief with respect to changes to their regulatory obligations in the event that the UK withdraws from the EU in March 2019 without an implementation period. Our position remains to use the transitional power in such a way that in all but certain limited exceptions – as noted in today’s announcement – UK regulated firms do not generally need to take action now to implement changes in UK law arising from the UK’s withdrawal by March 2019. Today the Bank is publishing draft directions that will implement transitional relief for a period of 15 months from exit day, subject to limited exceptions. This is in line with the approach taken by the FCA. We are also publishing detailed guidance for firms on how this transitional relief will apply.
The Bank’s use of the temporary transitional power is subject to the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 Statutory Instrument being made law.
- Second, it confirms our approach to changes to our rules and Binding Technical Standards as a result of EU withdrawal. In doing so, it sets out changes to obligations on firms that will apply once the transitional relief falls away. The changes we are making are to ensure that there is a functioning legal framework for UK financial regulation when the UK leaves the EU. They do not reflect any change in Bank or PRA policy, except to reflect the UK’s withdrawal from the EU. The Bank is today publishing the rule and BTS instruments in near-final form.
- Third, it sets out the roles and responsibilities the Bank will be taking on in March 2019 if the UK leaves the EU without an implementation period. The transferred responsibilities – which include, for example, the production of Solvency II technical information – would take effect on exit day.
Today’s materials are relevant to all firms and FMIs authorised and regulated by the PRA or the Bank, those firms and FMIs that may seek PRA authorisation or Bank recognition, and firms entering a temporary regime upon exit day. Firms are encouraged to read this package, alongside FCA materials published today. The Bank and PRA will communicate if and when the policy materials, including the directions that give effect to the temporary transitional power, and all rules and BTS Instruments, are made final and formally set to enter into force on Exit Day.