Following decisions made at the March European Council, the FCA has announced its support for the agreement on terms for an implementation period to follow the United Kingdom’s exit from the European Union.
This means that firms and funds would continue to benefit from passporting laws between the UK and the European Economic Area (EEA) until the implementation period closes at the end of December 2020. Consumer rights and protections derived from EU laws, such as GDPR, PSD2 and MiFID II, will also continue to apply.
This is positive news for UK fintech firms, many of whom currently benefit from EU regulations that allow them to operate freely across the continent. Digital banking app Revolut is one key example of an UK-based fintech which chose to apply for authorisation in Europe first, thus relying on passporting laws to allow that licence to cross into the UK once approved. It is still unclear, however, whether a deal might be reached on continued passporting after the implementation period ends. Revolut has said it still intends to apply for full FCA authorisation in the UK, as well as in the United States as part of its expansion plans.
A statement from the FCA added: “In light of the agreement on the terms of an implementation period and HM Government’s commitment to providing for a Temporary Permission Regime as a backstop, firms and funds currently benefiting from an EU passport need not apply for authorisation at this stage.”
The UK government first announced its plans to legislate for a Temporary Passporting Regime in December 2017. Subject to these plans going ahead, fintech firms will only need to notify the FCA of their intention to benefit under the regime rather than apply for authorisation directly.
The statement continued: "The implementation period would permit firms and funds to continue to benefit from passporting between the UK and EEA until the end of December 2020. UK firms and funds passporting into the EEA should discuss with their relevant EU regulator the implications of a transitional period for their contingency planning.
“The FCA will continue to cooperate closely with the home state regulators of EEA firms and the European Supervisory Authorities, and we stand ready to work with them to address any risks to consumer protection and financial stability.”