Trade association the Personal Investment Management and Financial Advice Association (PIMFA) has written an open letter to Boris Johnson inviting the new Prime Minister to make a speech relating to the UK financial sector.

Although PIMFA has repeatedly called for as smooth a Brexit transition as possible, the letter makes no direct reference to the UK’s impending exit from the European Union. The only hint of a reference to Brexit is when the letter mentions the importance of the City of London, by saying:

“Like you, we are committed to protecting the UK’s position as a global leader and London’s competitive advantage as a financial centre. As you are well aware, the decisions taken by the Government will be crucial in maintaining this success.”

The Association also attempts to establish common ground with Mr Johnson in areas such as financial literacy, by saying:

“We believe, like you do, that there needs to be an increased level of financial literacy, particularly amongst young people and older people too as they approach key life-altering financial decisions and PIMFA’s aim is to promote a culture of savings and investments so that more individuals prepare and are equipped for their financial futures.”

Despite Mr Johnson’s quote during his campaign that a no-deal Brexit was “a one in a million chance”, exiting without an agreement seems to be increasingly likely. The PM has not only said on a number of occasions that he will not  re-open talks with the EU unless they first agree to scrap the Irish backstop entirely, but has now written a formal letter to European Council president Donald Tusk with a demand that technological solutions are used instead to manage the Irish border issue come the exit date of October 31.

Therefore, firms with overseas connections need to be aware that a no deal exit is a real possibility. There may be a need to prepare for Brexit if any of the following apply to a firm:

  • The firm provides regulated products or services to customers resident in the European Economic Area (EEA)
  • The firm has customers based in the EEA, including those who were previously UK resident but may now have moved abroad
  • The firm markets regulated products or services within the EEA. This would include any firm whose website might in any way be targeted at EEA residents
  • The firm has service providers who are based in the EEA
  • The firm transfers personal data between the UK and the EEA or vice versa
  • The firm is part of a wider corporate group that is based in the EEA
  • The firm receives funding from an entity based in the EEA
  • The firm outsource or delegates tasks to an EEA firm, or vice versa
  • The firm is party to legal contracts which make reference to EU law

Perhaps the best-known feature of the existing EU financial regulatory system is the ‘passporting’ scheme. This scheme allows any firm authorised in a European Economic Area (EEA) member state to trade across the EEA without the need to obtain separate authorisation from the national regulator in each state. This scheme is now set to end abruptly on the exit date.

The Financial Conduct Authority (FCA) was given a ‘temporary transitional power’ by the Government. In the event that the UK leaves the EU without a deal, the regulator will be able to delay or phase in changes to regulatory requirements made under the EU (Withdrawal) Act 2018 so firms can generally continue to comply with their regulatory obligations as they did before exit. The power has so far been extended to December 31 2020.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article