Following the UK’s exit from the EU at 11pm on 31 January 2020, the UK entered the transition period agreed as part of the Withdrawal Agreement between the UK and EU. The transition period will last until 11pm on 31 December 2020.
During the transition period EU law will continue to apply to the UK under the terms set out in the Withdrawal Agreement Act.
EEA firms currently operating through a passport in the UK do so either via a Freedom of Establishment (FOE) passport (if they have a branch in the UK), or via a Freedom of Services (FOS) passport (if they do not have a physical presence in the UK).
EEA firms exercising passport/treaty rights in the UK qualify for authorisation under Schedules 3 and 4 of the Financial Services and Markets Act 2000 (FSMA) and are ‘authorised persons’ for the purposes of FSMA.
Passporting rights for EEA firms will continue for the duration of the transition period.
Once passporting rights cease at the end of the transition period, EEA firms currently relying on passporting arrangements will require authorisation from the PRA (or for solo-regulated firms, the FCA) to undertake business in the UK.
HM Treasury has legislated such that the Temporary Permissions Regime (TPR) and the Financial Services Contracts Regime (comprising Contractual Run-Off (CRO) and Supervised Run-Off (SRO)) will now take effect from the end of the transition period.
Under the TPR, a firm that is authorised to carry on regulated activities in the UK under passporting arrangements immediately before the end of the transition period can obtain a deemed Part 4A permission (or a deemed variation of an existing ‘top-up’ permission) while they seek authorisation from the UK regulators.
If your firm has already:
- made (and not withdrawn) a valid notification to the PRA that it wishes to enter the TPR, or
- submitted (and not withdrawn) an application for permission under Part 4A of FSMA (or for variation of an existing ‘top-up’ permission)
then you do not need to take further steps to inform the PRA of your firm’s intention to enter the TPR. (The validity of existing TPR notifications is not affected by the change to the start date of the TPR.)
If your firm has not taken the necessary steps to enter the TPR, it may still do so by submitting an application for permission under Part 4A of FSMA (or for variation of an existing ‘top-up’ permission) before the end of the transition period.
The Financial Services Contracts Regime will provide for the orderly wind-down of UK regulated activities of passporting firms that do not enter the TPR, or that exit the TPR without UK authorisation.