As of 11pm on 31 December 2020, the transition period ended and EU law no longer applies in the UK. For many financial services businesses, this means changes to existing systems and services.
Passporting between the UK and EEA states has ended and the temporary permissions regime[1] (TPR) has now come into effect for those firms and funds that notified us that they wanted to enter this regime.
This allows EEA-based firms that had been passporting into the UK to continue new and existing regulated business within the scope of their previous permissions in the UK for a limited period, while they seek full authorisation from us, if required.
It also allows EEA-domiciled investment funds that market in the UK under a passport to continue temporarily marketing in the UK.
Alongside the TPR, the Government has created the financial services contracts regime[2] (FSCR). This allows, for a limited period, EEA passporting firms not in the TPR to continue to service UK contracts entered into prior to the end of the transition period (or prior to when they enter FSCR) in order to conduct an orderly exit from the UK market now that the transition period has ended.
The extent to which UK firms can continue to provide services to customers in the EEA depends on local law and local regulators’ expectations. We expect UK firms to take the steps available to them to make sure they act consistently with these local laws and expectations. We are clear that firms’ decisions need to be guided by obtaining appropriate outcomes for their customers, wherever they are based.
Firms should also be prepared for the regulatory changes that have come into force. To help firms adapt to some of the new rules, the Treasury has given us new powers to make transitional provisions, known as the Temporary Transitional Power[3] (TTP).
While we have applied the TTP on a broad basis, there are some key exceptions where firms need to comply with the changed requirements now. Firms should check the implications of these for their business.
Credit rating agencies and trade repositories
At the end of the transition period, we have also become the UK regulator of UK-registered and certified credit rating agencies[4] (CRAs). This means that any UK legal entity that wishes to issue credit ratings publicly or by subscription will now need to be registered or certified as a CRA with us.
Additionally, any trade repository[5] (TR) wishing to offer its services in the UK after 31 December 2020 will need to be registered with, or recognised by us. UK reporting counterparties and UK TRs should use the UK EMIR validation rules when submitting derivative transactions entered into from 11pm on 31 December 2020 onwards.
To help firms, we have published extensive information on our website. Our Handbook[6] has also been updated with changes to regulatory requirements that apply to firms.
For more information on the end of the transition period and what this means for firms, refer to our other Brexit webpages[7].