LONDON (Reuters) - Britain’s financial watchdog said on Wednesday that financial services firms using passporting to do business in the UK do not need to apply for authorisation in the country at this stage, following the latest breakthrough in the Brexit negotiations.
The Financial Conduct Authority said it welcomed the agreement reached on the terms of the transition period that effectively sees Britain become a non-voting member of the European Union from March 29 2019 until the end of December 2020.
This meant “firms and funds currently benefiting from an EU passport need not apply for authorisation at this stage,” the watchdog said in a statement on its website.
The government’s planned temporary permission regime would act as sufficient backstop if the country crashed out of the bloc at the end of that period, it continued, allowing firms to continue to uphold their contractual rights and obligations even if permissions were suddenly lost.
British firms passporting their licenses into the European Union, however, would have to discuss what the transition deal meant for them with the relevant European regulators, it added.
Banks had called on British and European regulators to reassure them that they could rely on the terms of the transition deal, meaning they would not need to roll out contingency plans by March 2019.
The FCA said it would monitor further developments in the negotiations and update its guidance as necessary.
Its announcement follows similar reassurances for firms from the Bank of England.
Reporting by Emma Rumney, editing by Sinead Cruise