What is the effect of the Withdrawal Agreement Act on the ‘onshoring’ of EU law under the EU (Withdrawal) Act 2018?
Prior to the UK and EU agreeing the Withdrawal Agreement, HM Government and the UK regulatory authorities undertook a program of legislative activity to ensure that the UK continues to have a functioning financial services regulatory regime following its exit from the EU.
The EU (Withdrawal) Act 2018 (EUWA) functions to retain EU law and legislation implementing EU law and provides powers to amend it as appropriate for the UK legal environment. To this end, Parliament passed a number of Statutory Instruments amending retained EU financial services legislation. The UK regulators also made EU Exit Instruments to amend their rules and relevant Binding Technical Standards (BTS), using powers delegated by the EUWA.
Most of these instruments were due to come into effect on “exit day” (11pm on 31 January 2020). However, the Withdrawal Agreement Act defers the coming into force of these instruments until the end of the transition period which is also known as ‘IP completion day’ (defined as 11pm on 31 December 2020).
HM Government have also legislated so that the Temporary Permissions Regime (TPR), the Financial Services Contracts Regime and the Temporary Recognition Regime (TRR) will take effect from the end of the transition period.
At the end of the transition period, in the absence of any changes to reflect any new agreement on the future relationship between the EU and the UK, firms will be expected to comply with the legal and regulatory framework.