Financial services firms from the European Union should plan on continuing to operate as normal during the Brexit transition period following the U.K.'s official departure from the bloc, the Bank of England has said.
EU firms can "plan on the assumption" that they will only need U.K. authorization or recognition at the end of the Brexit implementation period, which runs until the end of 2020, it said March 28. They should plan on continuing to use so-called passporting rights, which allow them to freely do business in the U.K., or the EU framework for central counterparties.
The BoE's comments come shortly after the EU and the U.K. agreed on a 21-month transition deal for a phased-in Brexit, reducing the chances of a cliff-edge departure from the union.
Sam Woods, deputy governor of the central bank, said he welcomed the agreement, and said he expects there to continue to be "a high degree" of supervisory cooperation between the U.K. and the EU.
News of the BoE's stance on the transition arrangements was welcomed by UK Finance, a trade association that represents the finance industry in Britain.
The central bank's comments provide "much-needed clarity" around the transition, it said, adding that the impetus is now on the EU to follow suit.
"Without similar assurances from EU regulators, U.K.-based firms serving customers in the EU will be forced to continue implementing costly contingency plans," UK Finance CEO Stephen Jones said.