On October 8, 2018, HM Treasury published an Approach Paper setting out its proposal for a temporary transitional power to be given to the U.K. financial regulators to assist firms to adapt to the post-Brexit regulatory framework in an orderly manner in the event of a "no deal" scenario.
It is proposed that the BoE, PRA and FCA are granted a temporary power to award transitional relief from regulatory requirements where the requirements have been introduced or have changed as a result of onshoring financial services legislation. The power would relate to regulatory requirements in the PRA and FCA rules, onshored EU technical standards, onshored EU financial services regulations or delegated regulations and relevant U.K. primary or secondary legislation. The regulators would be able to grant transitional relief by issuing a "direction" setting out the terms of the relief, including whether the relief would apply to particular firms, classes of firms or to all firms. The power would not be available where a specific transitional arrangement has already been put in place for firms through regulations made under the European Union (Withdrawal) Act because HM Treasury believes that additional relief would not be necessary.
HM Treasury proposes that the power would be available to the U.K. financial regulators for two years from the day the U.K. leaves the EU. Any temporary relief granted using the transitional power would cease to have effect two years after Brexit.
The temporary power would only be available for the specific purpose of facilitating firms to adjust to onshoring changes and would not be a general power to waive or modify regulatory requirements for any other reason. In particular, the power would not apply to: (i) any provision setting the U.K.'s regulatory perimeter; (ii) the threshold conditions that all firms must meet; and (iii) any requirement that is not within the regulatory remit of the regulators.
The approach paper is available at: https://www.gov.uk/government/publications/proposal-for-a-temporary-transitional-power-to-be-exercised-by-uk-regulators?utm_source=0d2ba5e1-1ea5-4a70-8191-4c47b6fdf6ea&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate.