The Article 50 clarification removes one uncertainty but many matters remain unclear, unknown and uncertain about the exit outcomes and outlooks for various businesses in the UK. Moving to a stable position is vital and Capita Asset Services will continue to put our clients at the heart of everything we do and we remain closely connected to regulators, Government and industry to represent your interests and provide you with updates.
Following the initial introduction of the Brexit Bill to the House of Commons, the Government published a White Paper in February setting out how the UK plans to leave the EU. The paper is certainly aspirational and includes a list of 12 difficult objectives but it does not provide much in the way of detail at this stage. The 12 stated aims are:
The government’s preferred option post-Brexit is a bespoke bilateral trade deal with the EU27. This may be difficult to agree within the 2 year ‘notice period’ and so it would require transitional arrangements, or as the White Paper puts it, a ‘phased process of implementation’ of Brexit. This would be agreed between the UK and EU27 and will, according to the White Paper, ‘give businesses enough time to plan and prepare for those new arrangements’. For each issue, the time needed to phase in the new arrangements may differ; some might be introduced very quickly, some might take longer. And the interim arrangements we rely upon are likely to be a matter of negotiation.
The White Paper confirms a little more about the ‘Great Repeal Bill’ which the Government announced in October 2016. The headline to the Bill is that it will repeal the European Communities Act 1972 which makes EU law take priority in the UK.
In fact, rather than repealing EU legislation, the Bill will enshrine in UK law the whole body of EU law (the ‘acquis’) which applies to the UK at the time it leaves (much will already of course have been transposed into UK law). This means that, wherever practical and appropriate, the same rules and laws will apply on the day after we leave the EU as they did before. This approach will preserve the rights and obligations that already exist in the UK under EU law.
Businesses can continue trading safe in the knowledge that the rules will not change significantly overnight and provides fairness to individuals whose rights and obligations will not be subject to sudden change. Once we have left the EU, Parliament (and, where appropriate, the devolved legislatures) will then be able to decide which elements of that law to keep, amend or repeal. The Bill is expected to be included in the Queen’s speech in May.
Many questions remain unanswered at this stage and some clarification may need to be sought, including how legislation which is in the process of being implemented will be treated under the Great Repeal Bill. For example:
If a legal or regulatory measure is agreed whilst the UK is still an EU member but is not to be transposed until a date which falls after the two year Article 50 deadline how will that be treated?
What would happen to such legal or regulatory measures if the two year exit period were extended?
At what stage following the Brexit withdrawal would the job of amending or repealing previous ‘EU’ legislation begin and in what order will it be tackled?
There needs to be a clear definition of what ‘agreed’, ‘in place’ or ‘in force’ at the time of leaving the EU actually mean.
We believe that a good indication of which regulations will remain after withdrawal will be based on where and how they were derived. Our initial analysis of EU regulation currently on the table suggests that some regulations that the UK has supported or initiated will remain while others are less likely to survive.
For example, the Shareholder Rights Directive has been a more EU based initiative and has been challenging from a UK perspective and therefore will likely be lower down the list of priorities to keep. EU regulations and directives around data protection, market abuse, anti-money laundering and the CSDR which the government has supported, are all likely to be implemented before the formal withdrawal from the EU and to remain as UK law. Within some of these legislations however are elements that are due post two years from now (e.g. dematerialisation) and the Government will need time to determine how to progress.
The Great Repeal Bill is likely to consist of a number of separate bills. There will be a lot of legislation to be consulted on, keep track of and to review. The consultations will come thick, fast and with very little time to respond. As always our primary focus remains delivering an excellent service to you. Our teams are here to work through any challenges that you might face as the procedures and consequences of a potential UK exit become clearer.
We understand that the needs and challenges for each of our clients will be different: from growth companies trying to raise funds, to huge multinationals, the issues Brexit creates will be different. Please don’t hesitate to contact your Relationship Manager or our Head of Industry, Jai Baker, to talk through these. They would also be happy to help with any questions that you have.
While it is too early to understand the full implications of the Brexit withdrawal particularly with regards to the business and regulatory environment, we look forward to working closely with you to help you navigate and prosper during this period. We will continue to keep you updated as developments occur.