The Brexit saga continues, but what does the FCA expect from you?
One month ahead of the (latest) impending Brexit day, the general feeling among firms remains one of confusion. As it stands, the assurance one can usually take in the statutory process appears to have gone out the window. In the past week, we have seen the Supreme Court rule that PM Boris Johnson’s prorogation of Parliament was an unlawful attempt to subdue the scrutiny Parliament is expected to place on the Executive. Furthermore, the Benn Act was passed by Parliament, prior to the Prime Minister’s attempt to prorogue it, aimed at preventing Government from committing the UK to a No Deal Brexit. While this is now a legal obligation for the Executive, the Prime Minister has publicly said he will ignore it and plans to see that the UK leaves on the 31st of October, “do or die”.
At the beginning of February this year, eight weeks prior to the original 29th March Brexit date, we published a blog entitled “No-deal Brexit – is there a regulatory backstop?” In this blog, we attempted to summarise what firms could expect in the event we crashed out having failed to agree transitional provisions with the EU27. Eight months, four failed votes and one prime minister later we find ourselves in a painfully similar situation eight weeks before the new Brexit date of 31st October. In this blog we will revisit some the issues addressed in our initial blog, and how these may have changed since the time of writing. I write this though at a time of the utmost uncertainty, with legislation proposed to remove the possibility of No Deal, another Prime Minister under threat, and the possibility of a General Election that might yet result in a new referendum. Nevertheless, let’s deal with the here and now…
fscom's James Borley features in Thomson Reuters where he discusses the desire among payments firms for a better understanding of the licensing requirements of competent authorities in other European Economic Area (EEA) countries. View the full article below.
At the time of writing there are 10 days to go until the date (currently) written in UK and EU law on which the UK is scheduled to leave the European Union on March 29, 2019 – Brexit Day.
In anticipation of a ‘no deal’ Brexit, HM Treasury has enabled the FCA (and PRA) to create a Temporary Permissions Regime (TPR) whereby, at its simplest, EEA firms can effectively ‘grandfather’ their passports for a limited period beyond Brexit Day.
This blog seeks both to remind EEA firms of the TPR, and the need and method to enter it, prior to Brexit Day (assuming that the current timetable remains), but also to highlight a couple of pitfalls for payments and e-money firms should they leave such notification to the very last moment.
Several weeks ago, our Managing Director Jamie Cooke wrote a blog which discussed the position of UK-authorised firms with regard to EEA-resident clients. He pointed out that in the case of a ‘No Deal’ Brexit, a passporting UK firm will no longer be able to actively solicit EEA-based clients and discussed the lack of clarity regarding business initiated exclusively at the discretion of EEA-based clients.
Following another week of inconclusive Brexit debate at Westminster, the prospect of a disorderly, no-deal withdrawal seems, either by accident or design, to be looming larger on the horizon.
It occurs to me that whilst many UK authorised firms have made responsible plans for the migration of their European business, many such plans have reasonably assumed that either withdrawal would be governed by an EU / UK trade deal or that that the agreed transition period to 2020 would apply. Or perhaps both.
I expect that the immediacy of the 29 March is now concentrating the minds of boards in all firms whose applications to European regulators have yet to be approved. In particular, I suspect they will be urgently developing contingency plans for a no-deal Brexit, should one occur. (Download fscom's Brexit Planning E-book here)
As we embark upon yet another week of uncertainty regarding what Brexit deal, if any, the Prime Minister might secure, the latest in my Q&As with EU regulators sees me heading to Sweden.
I fondly recall, back in my FSA days, visiting Finansinpektionen (the Swedish FSA) to find out more about the payments market in Sweden and how they approached licensing and supervision, given they were one of the few EU Member States that took advantage of article 26(1) of PSD1 to allow for ‘Small Payment Institutions’ (SPIs). Colleagues at Finansinspektionen were friendly, approachable and keen to exchange knowledge and experience, so I was hopeful that they would continue to be so despite my own departure from the regulator. I am thankful, therefore, to Roger Jacobsson for sparing the time to answer our standard questions regarding UK payment/e-money institutions looking to establish a second business in Europe to benefit from passporting rights.
So, after weeks of conversations with various regulators across Europe, I am delighted to be able to share the views of the Central Bank of Ireland towards UK payment and e-money institutions looking to set up a new office in Ireland as part of their Brexit strategy. Since firms started thinking about their Brexit strategies, Ireland has often been mentioned by clients of fscom as their first consideration, principally based on common language and proximity. Indeed, being based in Belfast, we find our own proximity to Dublin to be particularly helpful in helping firms with the Central Bank. As we have seen though, there are many other factors that need to be taken into account. As ever though, I do not pass comment on the Central Bank’s views in this article, preferring to simply pass them on to help you make up your own mind. So, thanks again to the Central Bank for granting me access and, in particular, to Russell Burke from the Payments Authorisation Team.