European Union firms and strategies offered in the U.K. under the passporting regime will continue to do so on a temporary basis following the U.K.'s exit from the EU, under preparations by the U.K. government.
The U.K. government on Thursday published preparations for firms and individuals should negotiations with the EU over Brexit result in a "no deal."
Documents outlining the government's approach said the U.K. is "prioritizing stability" and continuity in financial services.
The government said in its documents that a key example of continuity is its commitment to introduce a "temporary permissions regime," which will allow firms that operate under the current so-called passporting regime to continue to do so for up to three years after the U.K.'s exit from the union. Under EU regulation, the passporting regime allows firms in member states to provide financial services across the EU under a common set of rules.
The temporary arrangement covers firms within the European Economic Area while they apply for full authorization to operate in the U.K. from regulators.
Following Brexit, financial services frameworks — the majority of which in the U.K. now derive from EU law — will need to be adjusted to reflect the U.K.'s exit.
"In order to ensure that we are prepared for a 'no-deal' scenario, the U.K. government's approach to financial services will, in general, be to treat EEA states largely as we currently treat other third countries, except where a different approach is necessary to manage the transition to a stand-alone U.K. regime," the documents said.
The financial services document is one of 25 "technical notes" published by the U.K. government. More will be published in September to set out further details on how a no-deal scenario will work, and how businesses and individuals should prepare.
