Irish Government is to restart preparations for a no-deal Brexit, Ministers will be told today, as negotiations between the UK and EU on a trade deal show little signs of progress. Read Here. UK fintech and financial services, it's time to advance plans to establish a presence in Ireland! The UK must decide by the end of June if it wishes to seek an extension to the present transition phase. However, the UK government has said it will not under any circumstances apply for an extension, meaning there are just seven months left for UK firms that need a financial services passport to establish a fully authorised base in a Member State which CompliReg can assist with. Read Here
Peter Oakes Blog, 30 May 2020
Peter Oakes Blog, 30 May 2020
Wednesday 27 May 2020: UK hopes that the EU will reach an agreement soon on the treatment of the UK’s crucial financial services sector, based on the principle of “equivalence” of regulation, but that issue had become entangled in the row about fishing.
Financial Times, 27 May 2020
Financial Times, 27 May 2020
"Downing Street has said it will not seek an extension to the current post-Brexit transition period, which ends on December 31, despite the business and political upheaval caused by the Covid-19 pandemic."
Financial Times, 28 April 2020
Financial Times, 28 April 2020
"There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union." Sajid Javid, UK Chancellor of the Exchequer.
Financial Times, 17 January 2020
Financial Times, 17 January 2020
UK FINTECH and BREXIT
Worried about continuing to provide regulated financial services in the UK and/or across the EU once the UK leaves the EU on 31 January 2020 and up to the end of the transition date of 31 December 2020?
Despite Brexit uncertainty, the UK’s fintech and wider technology and financial services sectors have grown strongly in recent years. Output in the information and communication sector has expanded three times as fast as the UK’s overall economy since the EU 'Brexit' referendum in 2016. The UK owes this recent success to several factors. Some are familiar: world-class universities, a flexible labour market and deep pools of investor capital. Furthermore the country’s liberal market economy is better placed to adopt new technologies than it was for the factory-based production during the middle of the 20th century, when it fell behind the rest of Europe.
Notwithstanding this positive news, any fintech regulated to provide EU/EEA passportable financial services should be fully aware that there are no plans for the continuation of regulated UK financial services across the EU/EEA once the UK leaves the EU from 31 January 2020 regardless of what is known as the "transition period" which comes to an end on 31 December 2020. [NB: the transition period is an 11-month transition period during which the UK will for all intents and purposes remain a de facto member of the EU bloc.]. As recently as 23 January 2020, the UK FCA informed the markets that "Firms still need to ensure they are prepared for a range of scenarios that may happen at the end of 2020 – and this includes the scenario in which the activities they conduct might not be covered by agreements reached between the UK and the EU."
There is currently no discussions between the UK and the EU on financial services (i.e. regulated fintech services). We know from the Queen's Speech delivered at the end of 2020 that the UK government is to propose new laws on financial services but nothing thus far indicates what the future will be for UK companies passporting financial services across the EU and EU companies passporting financial services into the UK. There is some short term comfort for those firms currently passporting into the UK which have already applied to the Financial Conduct Authority (FCA) or the Bank of England (BoE) (via the Prudential Regulatory Authority (PRA)) under the temporary permissions regime. In a summary of where we stand on the UK's 60bn 'services' industry, the UK Financial Times noted on Monday 13 January 2020 that the outgoing Governor of the Bank of England, Mark Carney, believed that the UK shouldn’t tie its hands when it comes to the City and should push to be less aligned with Brussels on services. This followed an interview Mr Carney gave to the FT on 7 January where he urged the UK government to avoid aligning its financial regulations with those in the EU in the hope of better trade terms after Brexit.
“It is not desirable at all to align our approaches, to tie our hands and to outsource regulation and effectively supervision of the world’s leading complex financial system to another jurisdiction,” Mark Carney, Governor, Bank of England.
Wolfgang Munchau's opinion piece in the Financial Times on 12 January 2020 makes the important point that "The reason a narrow trade deal is now the most likely way forward is that all the alternatives have been eliminated."
What does this mean for your fintech business?
(1) If you are a fintech regulated by the FCA or the BoE / PRA and you wish to continue to provide such regulated financial services cross-border (either by way of freedom of services or freedom of establishment) after 31 January 2020 then you should commence an application for authorisation with a financial services regulator in another EU Member State now.
(2) If you are a fintech regulated in an EU/EEA Member State and you wish to continue providing your regulated financial services in the UK after 31 January 2020, then you should commence an authorisation for your fintech operations from either the FCA or the BoE/PRA now.
Obviously there is very little time to apply and receive an authorisation in the UK or elsewhere before 31 January 2020. Although it is stands to reason that there should be some arrangement put in place between the UK and the EU to allow regulated firms to continue to operate in the others' jurisdiction, that will be of a temporary nature only. It is taking anywhere from 8 months to two years for companies to get authorised in the UK and elsewhere in the EU. Thus if you don't apply now, even if there is an extension, there is no guarantee that you will obtain the necessary authorisation before the end of 2020 - in which case your passportable activities are at a significant risk, both strategically and operationally.
The message is loud and clear - get moving now on your UK and / or EU authorisation!
How can Fintech UK help you?
We can assist you via our network of experts to: (1) for UK regulated fintech - obtain a regulated/authorised status in another EU Member State or (2) for EU/EEA regulated fintech - obtain authorisation from the FCA or the BoE/PRA depending upon your business model.
And of course, if you are a new UK fintech company looking to get authorised in either or both the UK and a EU Member State, we can also assist find an expert. We also help fintechs from outside Europe find experts to help you obtain a regulated financial services licence, including incorporation, for fintechs entering the European / UK market from Asia, Australia / New Zealand, the USA, Canada, South Africa, South America, Russia, the Middle-East and China.
Next Steps
Contact Peter Oakes (an internationally recognised financial services expert) us at hello@fintechuk.com or at the telephone number at appearing at https://fintechuk.com/contact-us.html for a confidential discussion on your options. Peter is a former senior regulator and central banker in Australia, the UK, Ireland and the Middle-East. Peter is also a Consultant in the Fintech & Regtech Practice of leading London commercial and financial services law firm, Kerman & Co.
FINTECH UK and BREXIT
Worried about continuing to provide regulated financial services in the UK and/or across the EU once the UK leaves the EU on 31 January 2020 and up to the end of the transition date of 31 December 2020?
Despite Brexit uncertainty, the UK’s fintech and wider technology and financial services sectors have grown strongly in recent years. Output in the information and communication sector has expanded three times as fast as the UK’s overall economy since the EU 'Brexit' referendum in 2016. The UK owes this recent success to several factors. Some are familiar: world-class universities, a flexible labour market and deep pools of investor capital. Furthermore the country’s liberal market economy is better placed to adopt new technologies than it was for the factory-based production during the middle of the 20th century, when it fell behind the rest of Europe.
Notwithstanding this positive news, any fintech regulated to provide EU/EEA passportable financial services should be fully aware that there are no plans for the continuation of regulated UK financial services across the EU/EEA once the UK leaves the EU from 31 January 2020 regardless of what is known as the "transition period" which comes to an end on 31 December 2020. [NB: the transition period is an 11-month transition period during which the UK will for all intents and purposes remain a de facto member of the EU bloc.]. As recently as 23 January 2020, the UK FCA informed the markets that "Firms still need to ensure they are prepared for a range of scenarios that may happen at the end of 2020 – and this includes the scenario in which the activities they conduct might not be covered by agreements reached between the UK and the EU."
There is currently no discussions between the UK and the EU on financial services (i.e. regulated fintech services). We know from the Queen's Speech delivered at the end of 2020 that the UK government is to propose new laws on financial services but nothing thus far indicates what the future will be for UK companies passporting financial services across the EU and EU companies passporting financial services into the UK. There is some short term comfort for those firms currently passporting into the UK which have already applied to the Financial Conduct Authority (FCA) or the Bank of England (BoE) (via the Prudential Regulatory Authority (PRA)) under the temporary permissions regime. In a summary of where we stand on the UK's 60bn 'services' industry, the UK Financial Times noted on Monday 13 January 2020 that the outgoing Governor of the Bank of England, Mark Carney, believed that the UK shouldn’t tie its hands when it comes to the City and should push to be less aligned with Brussels on services. This followed an interview Mr Carney gave to the FT on 7 January where he urged the UK government to avoid aligning its financial regulations with those in the EU in the hope of better trade terms after Brexit.
“It is not desirable at all to align our approaches, to tie our hands and to outsource regulation and effectively supervision of the world’s leading complex financial system to another jurisdiction,” Mark Carney, Governor, Bank of England.
Wolfgang Munchau's opinion piece in the Financial Times on 12 January 2020 makes the important point that "The reason a narrow trade deal is now the most likely way forward is that all the alternatives have been eliminated."
What does this mean for your fintech business?
(1) If you are a fintech regulated by the FCA or the BoE / PRA and you wish to continue to provide such regulated financial services cross-border (either by way of freedom of services or freedom of establishment) after 31 January 2020 then you should commence an application for authorisation with a financial services regulator in another EU Member State now.
(2) If you are a fintech regulated in an EU/EEA Member State and you wish to continue providing your regulated financial services in the UK after 31 January 2020, then you should commence an authorisation for your fintech operations from either the FCA or the BoE/PRA now.
Obviously there is very little time to apply and receive an authorisation in the UK or elsewhere before 31 January 2020. Although it is stands to reason that there should be some arrangement put in place between the UK and the EU to allow regulated firms to continue to operate in the others' jurisdiction, that will be of a temporary nature only. It is taking anywhere from 8 months to two years for companies to get authorised in the UK and elsewhere in the EU. Thus if you don't apply now, even if there is an extension, there is no guarantee that you will obtain the necessary authorisation before the end of 2020 - in which case your passportable activities are at a significant risk, both strategically and operationally.
The message is loud and clear - get moving now on your UK and / or EU authorisation!
How can Fintech UK help you?
We can assist you via our network of experts to: (1) for UK regulated fintech - obtain a regulated/authorised status in another EU Member State or (2) for EU/EEA regulated fintech - obtain authorisation from the FCA or the BoE/PRA depending upon your business model.
And of course, if you are a new UK fintech company looking to get authorised in either or both the UK and a EU Member State, we can also assist find an expert. We also help fintechs from outside Europe find experts to help you obtain a regulated financial services licence, including incorporation, for fintechs entering the European / UK market from Asia, Australia / New Zealand, the USA, Canada, South Africa, South America, Russia, the Middle-East and China.
Next Steps
Contact Peter Oakes (an internationally recognised financial services expert) us at hello@fintechuk.com or at the telephone number at appearing at https://fintechuk.com/contact-us.html for a confidential discussion on your options. Peter is a former senior regulator and central banker in Australia, the UK, Ireland and the Middle-East. Peter is also a Consultant in the Fintech & Regtech Practice of leading London commercial and financial services law firm, Kerman & Co.
FINTECH UK and BREXIT