LONDON (Reuters) – British regulators will give banks, asset managers, insurers and brokers until mid-2020 to fully comply with rules that replace European Union law in the event of a no-deal Brexit.
FILE PHOTO: Rain clouds pass over Canary Wharf financial financial district in London, Britain July 1, 2016. REUTERS/Reinhard Krause/File Photo
The Bank of England and Britain’s Financial Conduct Authority (FCA) on Thursday published a “near final” version of the rulebook that would come into effect if Britain leaves the EU without a transition deal.
Britain has already turned EU laws into UK statutes, but this “onshoring” entailed some changes to function properly and financial firms have said they would have limited time to comply if there is a no-deal Brexit, meaning they would be in breach of regulation and face possible sanction.
“In most cases, we plan to allow firms a period of 15 months to adapt,” the FCA and BoE said in separate statements.
Financial firms have been planning for all forms of Brexit since Britain voted in June 2016 to leave the EU, with the bloc as well as the UK putting in place measures to avoid markets falling off a “cliff edge” if there is a no-deal Brexit.
But FCA chief Andrew Bailey told UK lawmakers on Wednesday that despite the preparations, he could give no assurance that a no-deal Brexit would not disrupt finance.
“This grace period will offer relief and a degree of regulatory predictability,” Jonathan Herbst, global head of financial services at Norton Rose Fulbright law firm, said.
The final version of the rulebook would be published on 28 March, a day before Brexit is officially due to take place on March 29, if there is no deal.
If there is a transition deal, financial firms would continue under EU rules until the end of 2020 when the UK wants new, long-term trading terms with the bloc to start.
FCA executive director international, Nausicaa Delfas, said Thursday’s announcement was a significant milestone in the financial sector’s preparations for a no-deal Brexit.
“They ensure that there is a functioning regulatory regime from day one, and that firms are clear as to the requirements they need to meet by end March 2019 and beyond, so they can continue to meet the needs of their customers,” Delfas said.
Reporting by Huw Jones; Editing by Alexandra Hudson and Alexander Smith