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Navigating Brexit: Given the current state of affairs it would be wise to test your plans

By Victoria Roberts, Head of Policy and Government Affairs, Innovate Finance

The fact the UK is shortly due to leave the EU shouldn’t come as a surprise to anyone, but –  as political negotiations continue – you’re certainly not alone if you’re trying to decipher exactly which rules will change and when.

By its very nature UK FinTech is agile, adaptable and innovative, and we know many firms have invested significant resources over the last two years reviewing potential impacts on their customers, staff and business. But we also recognise how difficult it can be to interpret the latest parliamentary vote or keep track of where we’ve got to on the backstop to the backstop, especially when your daily focus is how to grow your sales and scale your business.  So, with B-day fast-approaching, we wanted to help our members revisit these questions, and check they’ve taken the necessary steps to ensure everything runs smoothly.

In the last month, we’ve held several events for Innovate Finance members to hear direct insights from officials, regulators and elected representatives on the shape of things to come, or where this may not yet be determined, to help at least with scenario-planning.  

Given the current state of affairs it would be wise at the very least to test your plans against:

Scenario 1a & 1b) Withdrawal Agreement + Transition Period agreed (with exit on 29 March, or exit at end of June if a technical extension is negotiated to give time to implement the Agreement)

Scenario 2)  No Withdrawal Agreement and no transition period (with exit on 29 March, commonly referred to as “no deal”)

And that’s before you get into possible customs union extensions or a move towards a second referendum.

We were delighted to welcome Kay Swinburne MEP to a recent breakfast discussion, where she helped Innovate Finance firms look beyond the UK media’s reporting on who said what in the House of Commons.  Kay provided a welcome wider perspective, drawing on her experiences of a decade in Brussels as a member of the European Parliament.

Following this, we held a webinar with HM Treasury officials and representatives from the FCA on Preparing for Brexit, looking this time at tangible, practical advice and hearing about preparations government and regulators have undertaken to assist firms with the transition. “Passporting” was a hot topic, used as shorthand to refer to the various rights for EU financial firms to sell their services cross-border from one member state to another. In the event of an orderly Brexit supported by the Withdrawal Agreement and Transition Period, FinTech firms should be able to continue to benefit from this until the end of 2020. However in a no deal scenario, this is not expected to be the case. The FCA is establishing a Temporary Permissions Regime to help EU companies conducting business in the UK, but for those trading from the UK to Europe, the advice was to contact the relevant national regulators to see what may or may not be permitted in this eventuality.

Law Firm Hogan Lovells also gave their time to help companies think through potential no deal implications. Links to the main reference sources mentioned are included below, but if you’re an Innovate Finance member looking for assistance, do get in touch to find out how to replay the webinar, or to request a slot at a Brexit “office hours” drop-in with Hogan Lovells.

On a final note, the session wrapped up with a useful reminder that the withdrawal state and transition period are intended to be temporary.  It is the future relationship between the UK and EU that will determine the longer-term detail of how companies conduct their business between the two blocs.  We will continue to monitor these developments, share insights and engage with policy-makers on key topics including the future flow of services, capital and data.

Gov.uk guidance

FCA guidance

ICO guidance

European Commission guidance

Hogan Lovells guidance

European Payments Council