Shearman & Sterling LLP | FinReg | UK Conduct Regulator Announces Details of Post-Brexit Temporary Permissions Regime for EEA Firms and Funds
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  • UK Conduct Regulator Announces Details of Post-Brexit Temporary Permissions Regime for EEA Firms and Funds
    04/11/2020
    The U.K. Financial Conduct Authority has published details of the temporary permissions regime that will allow FCA-regulated EEA firms to continue providing financial services in the U.K. for a limited period following the U.K.’s exit from the EU, in the event that no implementation or transitional period is agreed under the Withdrawal Agreement. Without an implementation or transitional period, EEA firms’ passporting rights to provide financial services would cease on the date that the U.K. leaves the EU.

    U.K. legislation has now entered into force establishing TPRs for: (i) firms subject to the Financial Services and Markets Act 2000 operating in the U.K. under a financial services passport; (ii) EEA payment institutions, EEA electronic money institutions and registered account information service providers; (iii) UCITS schemes; and (iv) Alternative Investment Funds. Such firms will be entitled to continue providing financial services for a limited period from the date the U.K. leaves the EU.

    The FCA’s website provides information on the application of the TPRs, including:
     
    • Notification requirements - firms must notify the FCA of their intention to utilize the TPR using the FCA’s Connect system by October 30, 2019, extending the FCA’s previous notification deadline of April 11, 2019. If a firm subsequently withdraws its notification in writing before exit day it will not enter the TPR.
    • Application of rules under the TPRs – firms under the TPR will have permission to operate in the U.K. under the Financial Services and Markets Act 2000 and will therefore be subject to the full scope of the FCA’s supervisory powers. The FCA’s Exiting the European Union: Temporary Permission and Financial Services Contracts Instrument 2019 sets out which rules will apply to firms operating under the TPR.
    • Considerations for firms leaving the regime – once registered under the TPR, firms will be given a period (known as a “landing slot”) in which to submit an application for U.K. authorization. The FCA is reviewing its approach to the authorization and supervision of international firms and intends to consult on the topic in due course, seeking views on how potential harms may be mitigated and whether firms should have a physical presence in the U.K.
    • Guidance for payments and e-money firms leaving the regime – payments and e-money firms will be subject to a different process for leaving the TPR. EEA payment institutions, and e-money institutions that provide payment services unrelated to e-money issuance will have to establish an authorized or registered U.K. subsidiary to provide services in the U.K. when the firm’s TPR ends. EEA e-money institutions which only provide payment services related to e-money issuance will have to become authorized or registered, but will not have to set up a U.K. subsidiary, when the temporary permission ends. These firms will not be given a landing slot, but will instead have to send a “notice of intention” within one year of exit day.

    The FCA has also published guidance on the process for notification of an intention to utilize the TPR using the FCA’s Connect system. On March 22, 2019, the Bank of England updated its information on the application of the TPR in respect of PRA-regulated EEA firms providing financial services in the U.K. under passporting rights.

    View the FCA's guidance on the TPR for EEA firms.

    View the FCA's guidance on how to notify an intention to utilize the FCA's TPR.

    View details of the FCA’s temporary permission rules instrument.

    View details of the FCA's extended TPR announcement on March 28, 2019.

    View details of the BoE’s guidance on the TPR for PRA-regulation EEA firms.

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