Expert Insight: Brexit Transition must end by 31st December 2020

Haydn Lightfoot, Senior Director at Synechron Business Consulting, comments on the EU’s deadline of 31st December 2020 for the UK Brexit transition period to end: “The recommendation from the European Commission that there should be a transition period running through until end 2020 has the potential to provide significant extra time for UK based banks to decide, plan and implement their post Brexit strategies whilst still ensuring that their financial services to EU based clients are not impacted.

Whilst the exact terms of the transition period will need to be agreed, the recommendation that the UK participate in the single market until the transition period ends, is a positive development for the banking sector, particularly as banks look to finalize relocation plans. It is hoped that banks will be able to operate under business as usual throughout this transition period, such that the extra time could allow banks’ post-Brexit plans to better align with EU / UK trade negotiations rather than simply target worst-case scenarios.

Furthermore, as the UK will be a third country from end Mar 2019, UK based banks could have time to investigate the possibility of applying for bi-lateral cross-border licenses with regulators of specific EU jurisdictions where they wanted to continue to offer services post Brexit. Such licenses could remove the need to relocate certain operations to the EU.

However, before banks can really begin to action these plans, the exact terms of the transitional period need to be agreed and made public quickly so that banks can maximise the benefits of the transition period and fully set their post-Brexit plans.”