UK to give temporary waivers to EU banks to keep them in London post Brexit

The UK Treasury has announced plans to give EU financial firms a temporary regulatory waiver to avoid the risk of a “cliff edge” Brexit suddenly stopping them from carrying out their business in the country.

This “temporary permissions regime” would be available to any EU-based financial firms and funds that are only regulated in the UK by the Financial Conduct Authority – which excludes the big banks and insurers.

The planned legislation by the government is the latest move by the UK to maintain the country’s attractiveness as a global financial centre despite the disruption of Brexit.

It follows an announcement by the Bank of England to allow EU banks to keep operating in the UK after Brexit through lightly regulated branch structures rather than forcing them to set up more heavily supervised and capitalised subsidiaries.

The move is also designed to avoid the FCA becoming overwhelmed by thousands of applications for licence approvals by EU-based firms and funds ahead of the UK’s planned exit from the EU on April 2019.

The FCA said: “This regime will enable relevant firms and funds to undertake new business within the scope of their permission, enable them to continue performing their contractual rights and obligations, manage existing business and mitigate risks associated with a sudden loss of permission.”

Firms that want to benefit from the “temporary permissions regime” must notify the FCA before April 2019. It is not clear how long the waiver will last, but the FCA said it would give more detail in the New Year.

In a further attempt to reassure firms worried about a “hard Brexit” scenario, the FCA said it expected the UK and EU to agree an implementation period that would allow their firms to keep accessing each other’s markets during that time.

The UK watchdog added that the Treasury will give it authority to oversee credit rating agencies and trade repositories in the UK after Brexit, at which point they will no longer come under the remit of the European Securities and Markets Authority.

Martin Arnold