Brexit: Where are we now?
As the Brexit saga continues to unfold, we bring you a digest of Brexit in January 2019 and look at how the regulator is responding.
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Having survived the vote of no confidence, Theresa May’s Government went on to avoid another general election but now faces parliamentary challenge on a ‘Plan B’ Brexit. Sticking points remain on the Irish border arrangement, while increasing chances of a hard Brexit are fracturing the government further, as more MP’s threaten to resign. ‘Plan B’ has also been criticised by some as being just a slightly re-worked ‘Plan A’.
A decision on this ‘Plan B’ Brexit must be reached by the 29th January. Here are some of the potential outcomes of this vote:
Scenario 1: Rejection
The government could end up having to present a ‘Plan C’ to parliament. This would require a shift in negotiating positions from both the Government and the EU… which is unlikely to happen.
Scenario 2: A preferred route
In this scenario, parliament pushes the government to suggest a different way forward, again, requiring a significant shift in their negotiating position. This would require a deadline extension, which is possible under Article 50, but the EU is not likely to agree to this as there isn’t another deal on the table to choose from.
Scenario 3: Another referendum
By amending the motion that states how Brexit is subject to approval, another referendum could be held. With definitions established of what the voting populace consists of, as well as the questions they’d be voting on, it could be another six months until a decision is reached – that’s just enough time to run a referendum properly, according to the Electoral Commission. Of course, under Article 50, this is subject to agreement from all 27 EU member states.
Meanwhile, the FCA is planning for a range of Brexit scenarios to ensure the regulatory framework remains robust, regardless of the outcome. It has recently published two additional consultation papers. The first outlines proposed regulatory technical standards for ensuring strong customer authentication and secure and common open standards of communication in the event of a no-deal Brexit. The second outlines how the FCA plans to recover the costs of regulating securitisation repositories, which it will be responsible for after the 29th March 2019.
The regulator also published a further consultation paper on setting out additional details of the proposed financial services contracts regime (FSCR). The FSCR aims to allow firms that have not entered the temporary permissions regime (TPR) to run-off their existing contracts with UK customers and exit the UK market in an orderly fashion.
What can firms do?
Our advice to firms is to implement no-deal scenario plans and sit tight. Even at this stage, there’s a lot of uncertainty – this is evident in the FCA’s preparations. Unfortunately, no one can predict the outcome, but the clock’s ticking so one will arrive soon!