FCA: firms should take legal advice on no-deal Brexit

Nausicaa Delfas, executive director of international at the FCA, said the regulator expects firms to take their "own legal advice on what a no-deal Brexit might mean" and any steps needed to mitigate the risks.

At a financial services Brexit summit in London today, Delfas said: "Just as we are preparing for all scenarios, so are you. You know your businesses best, and you will be doing your own contingency planning."

Delfas said firms should let customers know if there will be any change to the ability to provide services to them post Brexit, and whether these changes will affect products or contracts.

This could be, she said, in relation to changes to their rights and protection under FSCS and the Financial Ombudsman Service schemes or changing contractual terms.

The FCA is proposing that the ombudsman service should cover EEA firms that enter the temporary permissions regime, which allows them to carry on regulated business for a limited period while they seek full authorisation.

Delfas said the FCA is also consulting on arrangements for FSCS cover for EEA companies that enter the temporary scheme, as most EEA firms providing UK-based consumers with financial products and services are currently not covered.

She added that "risks remain, particularly in areas where actions would be needed by both the UK and EU authorities, such as contractual continuity, data adequacy and clearing".

One risk identified by the Bank of England relates to a more restrictive transfer of personal data between the UK and the EU, impacting the ability of households and businesses to access services from, and continue contracts with, financial services firms in other jurisdictions.

The UK Government has stated that in a no-deal scenario it will find the EU regime adequate, which will facilitate transfers of data from the UK to the EU, however Delfas said we "urgently need similar action from our EU counterparts".

Speaking to firms, Delfas concluded: "We should all continue to prepare for a range of scenarios, including a hard exit, in the interests of consumers and markets. We welcome your engagement, as we continue to consult on our approach."