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The last day of January 2020 marked Brexit day. However, the transition period that commenced muted immediate changes, with the UK continuing to be treated as a member state under EU law until 31 December 2020. The ambitious task for the UK and the EU of negotiating a new trading relationship by the end of the year however remains.
The unprecedented challenges brought by Covid-19 have justifiably necessitated a refocusing of government resources in recent months. Whilst commentators argue that an extension of the transition period is necessary, there has been no indication to date that an extension (which must be obtained by 1 July) will be sought by either side. Accordingly, the scheduled milestones for 2020 remain unchanged. Equivalence assessments are to be completed by both the UK and the EU in respect of each other’s regimes before the end of June 2020. A trade deal must be agreed and implemented by 31 December 2020. The UK and the EU have indicated that equivalence assessments have begun and are on track to be complete by the end of June deadline. On Wednesday 15 April the UK and EU scheduled three more rounds of negotiations for the weeks commencing 20 April, 11 May and 1 June 2020.
Mindful of the challenges our members face, UK Finance is maintaining momentum on its work in this area. Our newly established Trade and Market Access Committee will convene this month to determine with its members an industry position on trade and market access priorities for UK, EU and third-country audiences. This committee complements the EU Withdrawal Bill Steering Committee which provides a forum for our members to address technical regulatory and operational challenges arising from Brexit.
The Treasury is continuing its onshoring programme to ensure that the tapestry of EU law and rule-making processes will be onshored to UK law, and where appropriate adapted, to function correctly in the UK statute books and in practice.
UK Finance recently provided an update to its members on the UK’s onshoring program for the remainder of 2020. One of the key update items discussed was the temporary transition powers which will be made available to regulators for two years beginning after the transition period. These powers enable regulators to delay or phase in new regulatory requirements arising from Brexit. UK Finance welcomes this announcement and is reopening discussions with the Financial Conduct Authority (FCA) to learn how these powers will be used, in order to support our members in determining what regulatory or operational changes they need to prioritise.
Under this collaborative framework and governance structure, UK Finance provides a forum for its membership, other trade associations, law firms, government, and regulators to analyse and discuss draft onshoring legislative instruments relating to financial services in order to support a functioning legal and regulatory regime once the transition period ends.