As the end of the Brexit transition period approaches, the PRA has published a letter from Sam Woods, Deputy Governor for Prudential Regulation and CEO of the PRA, to CEOs of all PRA-regulated firms preparing for the end of the transition period and for entering the Temporary Permissions Regime (TPR). The letter stresses the need for firms to be operationally prepared to enter the TPR and to ensure that they are able to meet the PRA’s regulatory requirements once they are in the TPR. The transition period is due to end at 11pm on Thursday 31 December 2020 at which point the TPR will take effect.

To accompany the letter, the PRA has also published a new webpage on operational readiness for the TPR. The webpage does not contain new information, but refers firms to existing PRA materials and contains a brief summary of the following:

  • PRA’s approach to the TPR;
  • availability of transitional relief in relation to some requirements applicable to TPR firms; and
  • key requirements for branches (see summary below).

The PRA’s main webpage on the TPR contains more comprehensive information on the regime.

The PRA will continue to communicate with firms in order to determine the level of preparations being made by firms entering the TPR. If firms experience any problems during their preparation for entry into the TPR, they must proactively discuss these issues with the PRA.

UK branches of EEA firms: Key requirements of TPR highlighted by the PRA (for cross-border service providers, a more limited set of rules will apply)

Supervisory approach The PRA reminds firms of its approach to supervision of the banking and insurance sectors, as well as the obligations and supervisory framework applicable to firms in the TPR.
Threshold conditions (TCs) Firms must notify the PRA if they become aware (or have information that reasonably suggests) that they have failed to satisfy one or more TCs, may have done so, or may do so in the foreseeable future.

The PRA and FCA will take appropriate action, including using powers to impose requirements or to restrict or cancel a firm’s deemed Part 4A permission, if it appears a firm in the TPR is failing, or likely to fail, to satisfy the TCs.

Financial Services Compensation Scheme (FSCS) protection Insurance: Insurers that are ‘relevant persons’ for purposes of the Policyholder Protection Part of the PRA Rulebook will be required to pay FSCS levies in respect of policies that are protected by the FSCS. No transitional relief is available.

Banking: Once in the TPR, a UK branch of a deposit taker will be required to comply immediately with the Deposit Protection Part of the PRA rulebook. For example, firms will immediately be subject to the requirements to provide a compliant Single Customer View file within 24 hours of a request by the PRA or the FSCS, and within three months from the end of the transition period. No transitional relief is available.

Senior Managers and Certification Regime Firms should review the PRA’s note on the application of the SMCR to firms in the TPR.

All firms in the TPR, including cross-border service providers, must have an individual approved to perform the Head of Overseas Branch function (SMF 19). Firms are encouraged to apply for approval as soon as possible and within six weeks from the end of the transition period. Individuals must be approved by 12 weeks from the end of the transition period.

Status Disclosure (retail banking firms only) Firms in the TPR will have a three month transitional relief in respect of the requirement to use specific wording for their status disclosure to retail customers.

 

Clive Cunningham
Clive Cunningham
Partner
+44 20 7466 2278
Patricia Horton
Patricia Horton
Professional Support Lawyer
+44 20 7466 2789
Katherine Dillon
Katherine Dillon
Of Counsel
+44 20 7466 2522