Brexit: Expert discusses ‘importance’ of UK financial services
The data offers a clear indication of how rapidly Britain is diverging from EU regulations – breaking free of red tape in the process. As of early December, the UK had already made 50,000 amendments to EU legislation, according to research by Thomson Reuters.
The changes apply to EU laws which were retained in the UK after January 1, 2021, relating to areas including financial regulation, banking and finance as well as employment and social security.
A Thomson Reuters spokesman said: “The moves have left many of the retained laws peppered with changes throughout.
“For example, one EU regulation relating to financial services alone (Financial Services and Markets Act 2000) has had 2,195 amendments made to it so far.
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“Many changes are significant and could expose businesses to penalties and sanctions if they are not followed.”
In addition, there have been a further 43,000 amendments to existing UK laws contained in 900 Brexit-related Statutory Instruments, the research indicates.
Nor is the process anything like complete, with a huge number of additional Brexit-related Statutory Instruments and associated amendments set to be passed in 2021.
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Examples of changes which occurred on January 1, 2021 include:
Financial services regulation:
Under the retained law, in other words the previous EU law which took effect as UK law on January 1, 2021) the Financial Conduct Authority (FCA) is now responsible for publishing applicable UK data.
The FCA has a four-year transitionary period during which it has a revised set of responsibilities.
At the end of that period, once the period ends, the FCA undertakes to resume reporting – but must do so within 10 days of the end of each calendar month, rather than the previous five days.
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General Data Protection Regulation (GDPR) sets requirements for data protection and privacy standards for businesses operating within the EU.
However, the UK has diverged from GDPR by lowering the minimum age limit at which it will be lawful to process the personal data of a child from 16 to 13 years.
Sovereign debt on bank balance sheets:
The effect of divergence means after the end of the transition period, UK banks with exposures to EU sovereign debt no longer benefit from preferential treatment for those exposures (and, likewise, EU banks with exposures to UK sovereign debt similarly no longer benefit).
Regulation of chemicals:
Under a statutory instrument, the functions of the REACH Amendment of 2006 (Registration, Evaluation, Authorisation and restriction of Chemicals) will now fall under the Health & Safety Executive (HSE) in the UK.
As a result, UK businesses will need to establish whether and where the regulatory decision-making process of the HSE will differ from the European Chemicals Agency (ECHA).
CRAs and credit ratings:
Article 5 of the CRA Regulation, relating to equivalence provisions concerning the use of credit ratings by financial institutions issued by third-country CRAs, is an example of HM Treasury taking on powers previously held by the European Commission.
One of the key themes of Prime Minister Boris Johnson’s 2019 general election campaign was taking back control of Britain’s laws, money and borders.
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