The Financial Services (Implementation of Legislation) Bill provides the power to HM Treasury, in the event no deal is agreed between the U.K. and the E.U., to implement and make changes to a category of legislation which the Bill describes as “in-flight”. These are pieces of E.U. financial services legislation that: (1) have been adopted by the E.U., but do not yet apply so cannot be captured by the Withdrawal Act; or (2) are currently in negotiation and may be adopted within two years after exit day.
The FMLC has, in this letter, raised two issues of uncertainty arising from this proposal. First, the “in-flight” legislation listed in Clause 1(2) does not take into account those pieces of E.U. Level 2 legislation—like Commission Delegated Regulations which implement regulatory technical standards issued by European Supervisory Authorities in support of Level 1 legislation—that do not come into effect before exit day and will not therefore be retained under the Withdrawal Act. A second complexity arises because the list in Clause 1 of the Bill limits the scope of HM Treasury’s power to make regulations to implement “in-flight” legislation to only those identified therein. The effect of this is that those pieces of “in-flight” legislation which are not specific to financial services but which nevertheless impose obligations and requirements on financial markets participants will not be implemented by this means post-Brexit.
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