Instead, the Financial Conduct Authority (FCA) said it recognised the complexity and magnitude of the situation and would take note where firms had taken “reasonable steps” to prepare to meet new obligations by Brexit day.
At present, with the prime minister’s withdrawal agreement still not passed by parliament the UK is set to crash out of the EU in a no-deal Brexit on March 29.
The UK mortgage broker market is large expected to be unaffected by changes to regulations after Brexit, but the securitisation sector is one of those areas singled out by the regulator.
In its latest update on the situation, the FCA confirmed it would use the temporary transitional powers proposed by HM Treasury.
“We intend to use this power to ensure that firms and other regulated entities do not generally need to prepare now to meet the changes to their UK regulatory obligations that are connected to Brexit,” the FCA said.
It added: “If the UK leaves the EU without an agreement, we intend to use this power broadly to ensure that firms and other regulated entities can generally continue to comply with their regulatory obligations as they did before exit day for a temporary period.”
Securitisations not covered
The regulator also set out the areas where it would not make transitional provision and so expected firms and other regulated persons to start preparing now to comply with these post-exit regulatory obligations.
The FCA said: “In these areas, we expect firms and other regulated entities to undertake reasonable steps to comply with the changes to their regulatory obligations by exit day.
“We are conscious of the scale, complexity, and magnitude of some of these changes and consequently intend to act proportionately.
“This means that, in the event that the UK leaves the EU without an implementation period, we will not take a strict liability approach and do not intend to take enforcement action against firms and other regulated entities for not meeting all requirements straight away, where there is evidence they have taken reasonable steps to prepare to meet the new obligations by exit day.”
The sectors affected are:
- Firms subject to the MiFID II transaction reporting regime, and connected persons (for example approved reporting mechanisms),
- Firms subject to reporting obligations under European Market Infrastructure Regulation (EMIR),
- European Economic Area (EEA) Issuers that have securities traded or admitted to trading on UK markets,
- Investment firms subject to the bank recovery and resolution directive (BRRD) and that have liabilities governed by the law of an EEA State,
- EEA firms intending to use the market-making exemption under the Short Selling Regulation,
- Firms intending to use credit ratings issued or endorsed by FCA-registered credit ratings agencies after exit day,
- UK originators, sponsors, or securitisation special purpose entities (SSPEs) of securitisations they wish to be considered simple, transparent, and standardised (STS) under the Securitisation Regulation.