The UK financial regulator on Wednesday stepped up its preparations for a no-deal Brexit by outlining detailed plans for the oversight of EU financial services firms with operations in Britain.
The Financial Conduct Authority published a blueprint for how it would issue temporary authorisations for EU firms doing business in the UK.
The regulator also revealed that 1,300 EU firms that have activities in Britain would be willing to sign up to its proposal that they have time-limited permits lasting three years.
This figure represents fewer than 20 per cent of the 8,000 EU entities that hold authorisations from the bloc, called passports, to do business in the UK.
However, the FCA does not know how many of these entities — which often have complicated corporate structures — have multiple passports.
Passports allow firms located and regulated in one EU member state to sell products and services across the bloc without the need for separate permits in other countries.
But after Brexit, UK firms face the prospect of no longer benefiting from EU passports. Conversely, EU firms are not expected to be able to use their passports to do business in the UK.
The FCA will roll out its three-year temporary authorisations regime for EU firms in the event of a no-deal Brexit to try to smooth the end of passporting arrangements.
No similar temporary permits have been offered by Brussels for the 5,500 UK firms that currently use passports to do business in the bloc.
The FCA published nearly 1,000 pages of consultation documents on Wednesday.
One document outlined plans to incorporate EU financial services regulation into UK law and the FCA’s rule book.
The FCA said it would not make any big policy changes beyond what was needed to ensure chaos-free continuity after Brexit.
As EU watchdogs such as the European Securities and Markets Authority would no longer have jurisdiction in the UK after Brexit, the FCA is assuming various responsibilities, including oversight of credit-rating agencies.
The other FCA document set out details of the three-year temporary authorisations regime for EU firms, which would apply if the UK crashes out of the bloc without a proposed transition period that could last until 2021.
Nausicaa Delfas, the FCA’s executive director of international, said the consultation papers were aimed at ensuring that “in the event the UK leaves the EU in March 2019 without an implementation period, we have a robust regulatory regime from day one”.