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In response to the PRA's directions, the Financial Conduct Authority (FCA) publicly re-affirmed that regulated entities in the UK must meet the EBA's hard deadline at the end of 2021, despite Brexit and the pandemic.
As a result, from the 1 January 2021, UK financial services firms will lose their passporting rights. Passporting has allowed firms to sell their services into the EU from their UK base without the need for additional regulatory clearances.
The Agreement covers such matters as money, citizens' rights, border arrangements and dispute resolution. It also contains a transition period and an outline of the future relationship between the UK and the EU. Published on 14 November 2018, it was a result of the Brexit negotiations.
The Brexit impact on UK financial markets Research by New Financial indicates that: Over 440 banking and finance organisations have left the UK and relocated to the EU. Approximately 10% of UK bank assets (totalling over £900 billion) have moved, or are in the process of moving, to the EU.
Brexit means that the industry has now lost these rights, making access to the EU single market more difficult. To soften the blow, the UK government has been attempting to secure an equivalence agreement with the EU.