FSCS foresees no change in protection for consumers dealing with UK authorised firms post-Brexit
FSCS says it will continue to work closely with HM Treasury, the Bank of England and the Financial Conduct Authority on the implications of EU withdrawal.
The UK Financial Services Compensation Scheme (FSCS) has earlier today published its latest Outlook newsletter, providing some reassurance to clients of UK financial services firms regarding Brexit.
The body notes that while the UK is a member of the EU, or for as long as the UK continues to be bound by EU obligations during an implementation period, the UK financial system will continue to be regulated in accordance with its existing obligations as an EU Member State. FSCS will continue to protect depositors, policyholders, investors and others.
The Government has outlined a program of action designed to avoid disruption in the unlikely event of a no-deal scenario. This work includes putting in place a Temporary Permissions Regime for firms that are passporting into the UK before the withdrawal, to allow them to continue operating for a limited period of time while their application for full authorisation is considered.
The Prudential Regulation Authority and Financial Conduct Authority are consulting on the implementation of a temporary permissions regime, including what a no-deal scenario may mean for FSCS coverage.
“Generally, for consumers dealing with UK authorised firms in the UK, there will be no change in FSCS protection”, FSCS says.
Any changes affecting FSCS, and the coverage the scheme provides, will be consulted upon by UK regulators. FSCS will continue to work closely with HM Treasury, the Bank of England and the Financial Conduct Authority on the implications of EU withdrawal for FSCS and consumers to ensure clear and consistent messaging to stakeholders.
In the latest consultation paper regarding Brexit, the FCA asks for feedback regarding FSCS protection too.
The FCA proposes to:
• provide consumers of EEA firms in the TPR operating from UK establishments with FSCS protection, equivalent to the cover provided to customers of UK firms;
• continue to provide FSCS cover in respect of the activities of certain incoming fund managers (without an establishment) that are currently (pre-exit) covered by the FSCS.
EEA firms covered by the FSCS in the TPR will be required to contribute to the FSCS levy from April 1, 2019, even if they were not covered by the FSCS pre-exit.
The FCA expects incoming EEA-based firms in the TPR to consider and communicate to their customers any material changes in home state investor compensation scheme coverage, as a result of UK withdrawal from the European Union. The UK regulator would also expect such a firm to provide, on a customer’s request, information concerning the firm’s inclusion in any compensation schemes, including the firm’s home state scheme.
