The United Kingdom left the European Union on 31 January 2020. Throughout 2020, the UK has been in the so-called ‘transition’ period under which EU rules and rights continue to apply despite the country’s secession from the bloc.
However, the transition period is scheduled to end on 11pm on 31 December 2020 and firms need to be ready for several changes to the regulatory environment. In particular, passporting will end and EU laws will no longer have jurisdiction in the UK.
The FCA is using Temporary Transitional Power from the end of the transition period through to 31 March 2022. This will give extra time to meet many of the changes as it will allow financial services firms and regulated persons to continue to comply with the current requirements for a temporary period.
There are, however, certain requirements that affected financial services firms will need to meet by 1 January 2021. This includes obligations in relation to CASS and payment services (strong customer authentication and secure communication).
Firms currently providing services under a passport will need to take steps if they wish to continue to provide such services into 2021. However, if they wish to discontinue those services at the end of the transition period, this should be done in an orderly manner to avoid harm to consumers.
The Temporary Permissions Regime (TPR) will permit firms and funds that currently passport into the UK to continue to do so, provided that notify the FCA by 30 December 2020.
The FCA has also updated its handbook to reflect the changes which will apply to firms.
Whilst EU law will no longer apply, key legislation such as the General Data Protection Regulation (GDPR) will be transposed into UK domestic law, ensuring that data protection standards remain consistent with the European Economic Area. This means that irrespective of whether the UK leaves with or without a deal, firms must still adhere to data protection law.
According to the UK government, UK firms will be able to continue sending personal data from the UK into the EEA and certain other countries deemed adequate by the EU. In respect of transfers from the EEA into the UK, the EU will make an adequacy decision to determine whether the UK as a ‘third country’ has an adequate level of data protection.
Similarly, other EU law such as the Insurance Distribution Directive (IDD) have been brought into UK domestic legislation and, in effect, will continue to apply.
Extensive resources and information on Brexit are available on the FCA website.
For further information, please contact your RWA Business Manager.