On 28 October 2019 the European Council decided, in agreement with the UK, to further extend the period provided for in Article 50(3) of the Treaty on European Union until January 2020. The agreement includes the possibility that the Article 50 period may be ended earlier than 31 January 2020, on either 30 November 2019 or 31 December 2019, in the event that a withdrawal agreement is ratified by the UK and European Parliaments.
During the Article 50 extension period, EU law will continue to apply in the UK.
In preparation for circumstances where a withdrawal agreement is not ratified by the EU and UK, the Bank of England (Bank) and Prudential Regulation Authority (PRA) have published policy materials including EU Exit Instruments, Supervisory Statements (SSs) and a Statement of Policy (SoP). These generally have the effective date of ‘exit day’, or ‘immediately before exit day’ which is currently defined in the European Union (Withdrawal) Act 2018 to mean 31 January 2020 at 11pm.
We published the first of these materials as ‘near-final’ in PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ on 28 February 2019.
We then published made EU Exit Instruments and finalised statements in Section B of PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ of the 18 April 2019 version of PS5/19.
On 25 July 2019 we published additional draft EU Exit Instruments, an updated draft PRA Rulebook Instrument and updated draft PRA and Bank transitional directions in CP18/19 ‘UK withdrawal from the EU: Changes following extension of Article 50’.
We may need to make additional amendments to EU Exit Instruments during the further extension of the Article 50 period to 31 January 2020. Therefore we have not made final versions of the draft instruments published in CP18/19 at this time.
We have also not made final versions of the Bank and PRA transitional directions published alongside CP18/19, nor have we published updated transitional guidance materials. The latest transitional guidance materials were published as ‘near-final’ in Section A of the 28 February 2019 version of PS5/19. They will be updated to reflect any changes to final Bank and PRA transitional directions once made.
The instruments and statements are relevant to all firms authorised and regulated by the PRA, financial market infrastructure providers (FMIs) that are currently supervised by the Bank and firms subject to the Bank’s powers as resolution authority. Some of the changes are also relevant to firms authorised and regulated by the Financial Conduct Authority (FCA), and to the Financial Services Compensation Scheme (FSCS). The instruments and statements may also be relevant to firms that might seek to apply to the PRA or FCA for authorisation, and to FMIs that might apply to the Bank for recognition.
Any EU law that begins to apply during the Article 50 extension may be retained post-exit under the European Union (Withdrawal) Act 2018.
The Bank and/or PRA may issue further statements in relation to this topic, including in relation to any EU materials that begin to apply during the Article 50 extension period.