• Robert Bell

Post Brexit: The Impact on the Financial Services Sector

The Brexit transition period ended on 31 December 2020, with the UK and EU having agreed on the terms of the UK-EU Trade and Cooperation Agreement. In the days since, there has been a flurry of news and opinion around where the agreement leaves financial services.

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Working Towards the End of the Brexit Transition Period

The new framework marks a significant change, and brings with it a raft of considerations for financial services firms. The practical effect of the new arrangement will depend on individual businesses, and on the type of business conducted, and where its customers are located.


The major factors to consider are:


  • New data rules are in place. The GDPR remains law in the UK as the UK GDPR. UK firms can continue to send personal data from the UK to the EEA, and the UK-EU Trade and Cooperation Agreement will allow for the flow of personal data from the EU and EEA into the UK until adequacy decisions are made (no longer than 6 months). The Information Commissioner’s Office provides some additional information and recommends that firms have alternative safeguards in place before the end of April. The FCA recommends that firms consider taking legal advice if they believe they may be affected.

  • Passporting between the UK and EEA states has ended, and the temporary permissions regime is now in effect. The Government has created the Financial Services Contracts Regime, which allows EEA passporting firms that are not in the temporary permissions regime to continue to service UK contracts that were entered into prior to the end of the transition period.

  • The FCA is now the UK regulator of UK-registered and certified credit rating agencies (CRAs). The effect of this is that any business wishing to issue credit ratings publicly will need to be registered with the FCA as a CRA. Firms that use credit ratings for regulatory purposes should take care to use ratings issued by FCA-registered CRAs and must make sure they have contacted those CRAs to ensure they understand the changes they’ve made.

  • The FCA reminds firms of Principle 7 – ‘A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.’ In the context of Brexit, this places an obligation on firms to consider whether and how customers (for example, UK expats living in the EU) might be affected by the changes that the end of the transition period brings, and to contact these customers, letting them know about the changes, their effects on the customer’s situation, and how the firm will support them. The FCA also highlights that as well as providing the information via direct contact, firms should make it available on websites.

  • The FCA has published directions on the Temporary Transitional Power (TTP), the power that gives the FCA the ability to delay regulatory requirements that change due to Brexit, which firms must follow, and which apply on a broad basis until 31 March 2022. As a result, firms do not generally need to prepare now to meet changes to UK regulatory obligations brought about by onshoring, but they are expected to use the duration of the TTP period to prepare for full compliance by 31 March 2022. Further information, including links to key requirements for firms, is available here.


The FCA has also published a set of pages giving information to consumers and small businesses on the potential effects of Brexit. The summary pages cover changes to financial products and services for consumers that live in the UK, communicating that the Regulator expects firms to tell customers if their products are affected in any way, and advising consumers to check insurance policies, and to contact their provider if they are unsure whether they will be affected. Consumers living in the EEA are advised that there may be cases where UK providers cannot continue to operate in their country; the FCA advises these consumers to communicate with their providers to discuss other arrangements.




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