HM Treasury has published guidance on a proposal for temporarily empowering the UK financial regulators (the Bank of England (BofE), PRA and FCA) to make transitional provisions by waiving or modifying firms’ regulatory obligations where those obligations have changed as a result of ‘onshoring’ financial services legislation. For example, the power can be used to:
- delay the application of onshoring changes; and
- grant transitional relief to firms with regards to existing regulatory requirements that would otherwise apply for the first time on exit day.
The purpose of the transitional powers is to ensure that any changes to firms’ regulatory obligations do not pose a risk to the UK regulators’ objectives, for example, financial stability and also to provide a smooth transition for firms in a post exit regulatory regime. The powers will be available to regulators for a period of two years from exit day and transitional provisions made using the power will cease to have effect two years after exit day. An SI will be laid before Parliament in due course to give effect to the temporary transitional powers.