Yesterday the Brexit Secretary gave a speech and published the first twenty five of an expected eighty papers on what will happen if the EU and the UK do not enter a new trad agreement, and instead revert to WTO terms on trade between them. Elsewhere on this site you can read the full speech.
Here I summarise my initial understanding of the announcements:
Government guidance on preparing for Brexit with no deal
The first 25 of the technical notices giving advice to businesses and organisations on what they may need to do if the UK leaves the EU without an agreement are published here, including a notice on banking, insurance and other financial services if there is no Brexit deal.
Dominic Raab MP, has emphasised that the UK Government has “set out practical measures to mitigate any risks of disruption to [food] supply.”
Financial services if there is no Brexit deal
In a no deal scenario, the UK would be subject to EU rules for third countries outside the European Economic Area (EEA). The UK would default to treating firms from the EEA as though they were from third countries.
The Government would introduce a Temporary Permissions Regime (TPR) that will allow EEA businesses currently passporting into the UK to continue operating in the UK for up to three years after exit, while they apply for full authorisation from UK regulators. This would be implemented by the FCA. Similar temporary regimes will be provided for EEA electronic money and payment institutions, registered account information service providers and EEA funds that are marketed into the UK.
The Government has already laid draft secondary legislation for non-UK central counterparties (CCPs) to provide clearing services in the UK for three years while applying for recognition. Details were published by the Bank of England in December.
The Government has also promised legislation to ensure contractual obligations between EEA firms and UK customers which are not covered by the Temporary Permissions Regime can continue to be met, and legislation to deliver transitional arrangements for:
• Central Securities Depositories
• Credit Rating Agencies
• Trade Repositories
• Data Reporting Service Providers
• Systems currently under the Settlement Finality Directive
• Depositaries for authorised funds.
Implications for UK customers
The cost of card payments between the UK and EU may increase, as cross-border payments will no longer be covered by the ban on surcharges.
For UK customers of EEA firms, changes will depend on whether the firm receives authorisation within three years.
Implications for UK businesses
Businesses are advised to plan on the basis that an implementation period will be in place from March 2019 to December 2020.
Data Protection
The Government will publish a separate technical notice on transfers of personal data. Though it is hard to understand why, it appears the Government does not recognise that the UK having made the General Data Protection Regulation part of UK law in the 2018 Data Protection Act means there should be no personal data issues post Brexit. This is worrying as it may mean other areas are similarly being looked at from a questionable perspective.