Considerations for firms after the transition period

Passporting between the UK and the EEA has now ended.

Passporting allows firms authorised in EEA states to conduct business in other EEA states based on their ‘home’ member state authorisation.

However, passporting between the UK and EEA states ended with the close of the transition period at 11pm on 31 December 2020.

This affects firms and funds based in the:

• UK that conduct certain types of business in the EEA
• EEA that carry out certain types of business in the UK

If you intend to do business in the EEA, you should ensure you do so consistent with local laws and local regulatory expectations, eg seeking authorisation with a local authority where appropriate. 

The European Union (Withdrawal) Act 2018 converted into UK law existing EU legislation that had direct effect in the UK at the end of the transition period. This also preserved existing UK laws that implemented EU obligations.

The Government was given powers to amend the retained EU legislation so it works in the UK after Brexit. It has used this power to make numerous statutory instruments that amend retained EU financial services legislation.

The Government’s intention was that the same rules and laws continue to apply, as far as possible, but with the necessary amendments to reflect the UK’s position outside the EU.

The Government gave us (and, where relevant, the Bank of England and the Prudential Regulation Authority) responsibility for amending and maintaining certain EU binding technical standards that have become UK law. These technical standards specify detailed requirements for the purposes of various EU regulations and directives.

We have amended our Handbook[1] to make sure it’s consistent with changes the Government has made, and so it still works effectively now that the transition period has ended.

For more information, read our statement on changes to UK legislation[2].

To help you adapt to your new requirements, the Treasury gave UK financial regulators the power to make temporary transitional provisions in relation to financial services legislation. This was known as the Temporary Transitional Power (TTP).

Our use of the TTP has ended and firms must fully comply with UK onshored regulatory obligations. The TTP expired on 31 December 2022. However, in line with agreed timescales we stopped using the power on 31 March 2022, except in relation to the Share Trading Obligation (STO) and the Derivative Trading Obligation (DTO).

The TTP continues to apply to the STO and the DTO directions, which took effect from the end of the Brexit transition period (11pm on 31 December 2020). We continue to monitor market and regulatory developments and will review our approach if necessary.

Following Treasury legislation[3], the period during which the STO and DTO TTP Directions may continue to apply was extended to 31 December 2024.

• Read the FCA direction to modify the UK’s derivatives trading obligation[4].
• Read more about the TTP[5].

We are now the UK regulator of UK-registered and certified credit rating agencies (CRAs)[6].

This means that any UK legal entity that wishes to issue credit ratings publicly or by subscription will need to be registered or certified with us as a CRA. These CRAs have made system changes to flag ratings that are available for regulatory use in the UK.

If you use credit ratings for regulatory purposes, you should use credit ratings issued or endorsed by FCA-registered CRAs. You should have contacted the relevant CRAs whose ratings you use, to understand the systems changes they’ve made.

If your firm transfers personal data between the UK and the EEA, you should be aware of the new data rules that are now in place.

The Government has legislated[7] so that UK firms can continue to lawfully send personal data from the UK to the EEA and 13 other countries that the EU has deemed to provide an adequate level of protection of personal data.

The Government has also announced[8] that the UK-EU Trade and Cooperation Agreement provides for the continued free flow of personal data from the EU and EEA to the UK until adequacy decisions are adopted, for no longer than 6 months.

The Information Commissioner’s Office (ICO) is the regulator for data protection issues in the UK. Read the ICO's information on data protection and Brexit.

The ICO has said[9] that the agreement between the UK and the EU enables businesses and public bodies across all sectors to continue to freely receive data from the EU (and EEA). However, as a sensible precaution, the ICO recommends that businesses work with EU and EEA organisations who transfer personal data to them, to put in place alternative transfer mechanisms to safeguard against any interruption to the free flow of EU to UK personal data.

You should also consider taking legal advice if you believe that you might be affected. 

You must pay attention to what your customers need to know, and communicate with them in a way which is clear, fair and not misleading (Principle 7).

We expect you to have contacted any of your customers who have been affected by the end of the transition period. We have made this clear in information we have published for consumers on how Brexit might affect them[10].

You should be able to show you have considered and planned for how the end of the transition period may have affected your customers. You should keep in mind that different categories of customers may have been affected in different ways, as is set out in our guidance in PRIN 1.2[11].

For example, customers based in the EEA (including UK expats) may be more affected than those living in the UK. You should have contacted each group of customers, to explain clearly how they have been or will be affected.

As well as offering information directly to your customers, you should have made the important information available more widely, such as on your website. This also includes being prepared for the possibility that you may have a significant increase in consumer queries now that the transition period has ended.

We expect you to have communicated to your customers in good time – usually, the earlier the better. You must also continue to communicate clearly to your customers, taking care to avoid confusion with multiple messages that could change over time.

You should continue to consider what information consumers need to know and when. If customers need to act, then you must provide (or, in many cases, should have already provided) the information they need in a realistic time for them to make these decisions.

It’s important you have answers ready to reassure customers where appropriate and make sure you’re able to address customer queries accurately, fairly, clearly and promptly.