There’s more and more dialogue about a no-deal Brexit these days, even though Jean-Claude Junker and Michel Barnier are clearly trying to avoid it as they have said a deal is now 85% agreed . It’s just not the Chequers deal. Whether a deal is agreed or not with the EU, the challenge is then to get that deal agreed by UK Parliament and the House of Lords. That’s not going to be easy as nearly all of the MPs and Lords are at loggerheads over which way to go. Over half still want to remain, a few want to leave and a core rebel force demands to leave on our own terms.I guess that’s why a no-deal hard Brexit is under discussion. In preparation for such a no-deal, what happens with banking? Well, I’ve already blogged about that a month ago , when UK Gov announced their views on what happens. The reason I’m blogging about it again is that the Financial Conduct Authority (FCA) this week issued two consultation papers explaining their views on what happens. CP18/28: Brexit: proposed changes to the Handbook and Binding Technical Standards – first consultation CP18/29: Temporary permissions regime for inbound firms and funds The main headlines are that there will be no change for three years, or as little as possible, in the UK view of EU financial firms, as they will be able to claim temporary permissions to stay in Britain. In addition, as most EU regulators will no longer have supervision of UK-based EU financial institutions, the FCA will take over regulatory oversight. Equally, as the FCA has been the body implementing EU rules for UK financial institutions, the two regulatory regimes will still be identical from day one, and that is unlikely to change in the short-term. Having said that, the FCA has been given power by the Treasury “to waive or modify some requirements to allow for a smooth transition to the post-exit regulatory regime”, so, you never know.All in all, my impression is that a no-deal would leave the UK with rules and regulations that maintain EU parity for at least the first three years. In other words, we will create a transition period of stability , whether a deal is forthcoming or not. Whether the EU will do the same for UK financial firms operating around Europe remains to be seen.Nevertheless, not everyone agrees. The Bank of England produced a report this week , stating that the lack of adequate planning for Brexit has created growing risks for almost £41 trillion of complex financial contracts, particularly in the clearing of derivatives.Related: The Future of Bitcoin Their report states that “there has been considerable progress in the UK to address these risks, but only limited progress in the EU. In the limited time remaining, it is not possible for companies on their own to mitigate fully the risks of disruption to cross-border financial services. The need for authorities to complete mitigating actions is now pressing.”The International Monetary Fund (IMF) also produced a report this week , stating that millions of financial contracts between City banks and their European counterparts could collapse, in the event of the UK leaving the EU without a deal.“A rise in political and policy uncertainty could adversely affect financial market confidence,” the IMF said in its financial stability report. “For example, growing anxiety about a breakdown in Brexit negotiations could give rise to contractual and operational uncertainties in the United Kingdom and elsewhere in Europe.”It added: “In general, the likelihood and severity of financial stability risks will be reduced by a closer relationship between the United Kingdom and the EU during the transition period and beyond, but will be heightened in the event of a hard Brexit.”Therefore, the likelihood of a straight and smooth transitionary period if a no-deal Brexit happens seems about as likely as finding Boris Johnson selected to be the next Pope.Meantime, if you’re confused about what the Chequers Plan is or how a Transition Period works, The Independent published an excellent piece this week entitled: 22 Brexit phrases everyone’s using but you were too afraid to ask about . It’s well worth chequing out if you need to know more.