The UK’s membership of the European Union came to an end at 11pm on 31 January 2020 following the ratification by the UK and the EU of the Withdrawal Agreement. Under the terms of the Withdrawal Agreement, the UK entered into a transition period, which ended at 11pm on 31 December 2020. During this period, EU law continued to apply in the UK in the same way as it applied prior to the UK’s exit.
HM Government and the UK regulatory authorities have undertaken a program of legislative activity to ensure that the UK continues to have a functioning financial services regulatory regime once EU law ceased to apply in the UK following the end of the transition period.
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 (SIs) amending retained EU financial services legislation. The UK regulators have also made EU Exit Instruments to amend their rules and relevant Binding Technical Standards (BTS) using powers delegated by the EUWA. Key materials are set out in the table below.
In consultations in October 2018 and December 2018, the Bank of England (Bank) and Prudential Regulation Authority (PRA) published policy materials including draft EU Exit Instruments, transitional directions and associated guidance documents, Supervisory Statements (SSs) and a Statement of Policy (SoP).
We published the first of these EU Exit 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 published the first set of made EU Exit Instruments and finalised statements in Section B of the 18 April 2019 version of PS5/19.
These 2019 materials generally had the effective date of ‘exit day’, or ‘immediately before exit day’. Under the European Union (Withdrawal Agreement) Act 2020 (which gave effect to the Withdrawal Agreement in UK law) the commencement of these EU Exit instruments was delayed until the end of the transition period.
In consultations in July 2019, during an extension of the Article 50 period, and September 2020, during the transition period, the Bank and PRA published additional draft policy materials including revised and amending EU Exit Instruments, transitional directions, Supervisory Statements (SSs) and Statement of Policy (SoP).
On 18 December 2020 we published more made EU Exit instruments and the final Bank transitional direction as well as updated statements and other policy materials in PS27/20 ‘The Bank of England’s amendments under the European Union (Withdrawal) Act 2018: Changes before the end of the transition period’. In PS27/20, we also published the PRA Rulebook EU Exit Instrument 2020 and PRA transitional direction and related guidance documents as near-final due to dependencies on CRDV rules.
On 28 December 2020 we published the final PRA Rulebook EU Exit Instrument and final PRA transitional direction and related guidance documents in PS30/20. These materials, including those published previously on 12 April 2019 and 18 December 2020, commenced at the end of the transition period.
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.
The Bank and PRA must submit a report to Parliament if we exercise our relevant sub-delegated powers under the EUWA. HM Treasury laid our report covering the financial year ending 29 February 2020 in Parliament on 17 September 2020. A report covering the use of the powers in the financial year ending 28 February 2021 will be submitted in due course.
The Bank and/or PRA may issue further statements or updates in relation to this topic.