It’s been a busy and very hot August. Greece exited the last component of the stability program, Turkey and Trump tucked into turmoil, and as the UK continued to push its much unloved, and what the EU has iterated is an unworkable, Chequers Deal, it also began publishing No Deal Notices to Business. Add to that the fact that the UK parliament returns from its break on September 4 before the start of the political party conference season, and September will probably see little room for views to settle. The hope that the UK + EU-27 “Couples Mediation”, scheduled at the September Summit in Austria will yield a breakthrough beyond pledges for more intensified talks, is instead starting to slip towards crunch talks in November/December. The prospect of a “time out” on the timeline or a transition deal is still contingent on core parts of the divorce deal needing to be agreed.

So, what does this mean for planning for financial services? While the UK authorities have begun publishing proposals, of which part of EU financial market services legislation is to be kept and copied over into UK law, along with the proposal for a Temporary Permissions Regime for those EEA firms operating in the UK, the EU authorities have stuck and even sharpened their supervisory principles on relocations (SPoRs) that set out the supervisory expectations for those financial services firms coming to the UK as well as those EU firms operating in the EU in what it considers to be permitted. The mismatches and conceptual divergences between what the two sides of the divide consider acceptable could accelerate. None of this is stopping policymakers to slow down on rulemaking in non-BREXIT areas or to extend consumer protection and product intervention powers.

One central area of change is that the ECB-SSM may now be stepping up preparations to extend their supervisory perimeter to cover those non-bank financial institutions that engage in “bank like” activity. Even if that term is not yet fully defined, it builds upon the EU Commission’s legislative proposals for a new prudential regime for MiFID Investment Firms which (see our coverage here) could sharpen supervisory engagement, especially if the ECB-SSM takes an active role in direct supervision and/or requires national authorities to apply standards in a certain way. That change in tone has been on the cards and could happen regardless of any Brexit-deal.

We hope you enjoy this month’s edition and wish you a great start to September.  Please stay tuned for further special features including our Financial Regulatory Outlook for 2019.