As concerns about a no-deal Brexit have increased over the last couple of months and the departure date draws closer, regulators are increasing their efforts to prepare for the UK's exit from the EU.
Major issues being grappled with by many regulators include information sharing, recognition of qualifications and harmonised approaches to standards. Last week's news covered the announcement by the Pan-European financial regulator the European Securities and Markets Authority that it is in the process of drawing up Memorandums of Understanding between the Financial Conduct Authority and the 27 other EU financial regulators. Without such agreements there are concerns that in the event of a no-deal Brexit UK market participants would lose their authorisations to conduct business across the EU and there would be no legal basis for the daily data exchange between the UK and Europe. It has also been reported that the Civil Aviation Authority (CAA) has been seeking a joint no-deal transition plan with the European Aviation Safety Agency. Without any such arrangement, in the event of a no-deal Brexit the EU would not recognise certificates, approvals and licences issued by the CAA and British pilots with UK licences wanting to fly EU registered aircraft would have to obtain a separate licence from an EU country.
In both of these cases the progress that can be made with talks and agreements has been said to be limited by the current uncertainty around the wider Brexit negotiations. Until the bigger picture becomes clearer, regulators are left to plan for a range of scenarios and prepare for potentially vital last-minute discussions with their EU counterparts. Although less than satisfactory, there is of course value in regulators undertaking this preliminary work to ensure that they are well-positioned to respond to the developing political picture as quickly as possible, and this will be the case for organisations and businesses throughout the country.
In addition, in many regulated sectors such as finance, pharmaceuticals and food standards, there are functions currently carried out at an EU level which in the event of a no-deal Brexit could fall outside the scope of the powers of any of the relevant regulators in the UK. For example, the FCA has started making plans to take over supervision for certain sectors, such as credit-rating agencies and trade repositories, which are currently carried out by its European counterpart. All of these functions must be identified and steps taken to ensure that nothing falls through the gaps. Many of these are issues that Parliament will need to resolve with legislative provisions and are a reminder of just how complex the web of regulation is between the EU and the UK and the potential impact of a no-deal Brexit without sufficient time to prepare for such an outcome.