"We have published a version of our Handbook that will apply from the end of this year, which includes the changes made through the onshoring process."
The TTP gives the FCA flexibility as to how and when changes to its rules apply following the end of the transition period, allowing firms to transition to the new regime. Where it applies, the TTP means that firms and other regulated persons can continue to comply with their existing requirements for a limited period.
The FCA intends to apply the TTP on a broad basis from the end of the transition period until 31 March 2022. This means firms and other regulated persons do not generally need to prepare now to meet the changes to their UK regulatory obligations brought about by onshoring.
By reviewing the new Handbook site, alongside the updated TTP information, firms will be able to see which changes will apply to them.
In some key areas, the FCA expects firms and other regulated persons to be preparing to comply with changed obligations ready for 31 December 2020. These include:
- MIFID II transaction reporting
- EMIR and SFTR reporting obligations
- Certain requirements under MAR
- Issuer rules
- Contractual recognition of bail-in
- Client Assets Sourcebook requirements (CASS)
- Market-making exemption under the Short Selling Regulation
- Use of credit ratings for regulatory purposes
- Securitisation
- Electronic commerce EEA firms
- Mortgage lending after the transition period against land in the EEA
- Payment Services – strong customer authentication and secure communication
The FCA says it expects firms to "use the duration of the TTP to prepare for full compliance with changes to UK regulatory obligations by 31 March 2022".
Nausicaa Delfas, executive director of international at the FCA, said: "We are approaching the end of the transition period, so firms should be completing their final preparations. To help firms to prepare and provide clarity, we have published a version of our Handbook that will apply from the end of this year, which includes the changes made through the onshoring process.
"We have also set out further details on the Temporary Transitional Power (TTP). The power will in most cases give firms more time to adapt to their new obligations. There are some areas where it would not be appropriate for us to apply the TTP, including where doing so could run counter to our objectives: in those key areas, we continue to expect firms and other regulated entities to prepare now to comply with the changes to their regulatory obligations by 31 December 2020."
Mark Turner, managing director of compliance and regulatory consulting at Duff & Phelps, commented: “Today’s announcement from the FCA comes with no great surprises for firms and regulated persons who must comply with FCA regulation. The FCA is doing all they can to ensure a smooth transition, with no sudden divergence from the EU rulebook on day one.
“The extension of the Temporary Transitional Power (TTP) until March 2022 will come as a relief to those needing to meet the new obligations brought about by onshoring and allow for a smoother transition for those affected.
“The FCA has also made it clear that they don’t expect the TTP to be abused, for example by allowing firms to apply lower standards in key areas than firms already regulated as UK entities. Those firms making use of the TTP should therefore review their obligations in these areas – including transaction reporting, client assets, payment authentication – as a matter of priority, as they will need to be compliant by 31st December 2020, less than 3 months from now.”
