The UK is heading towards a temporary permissions regime (TPR) to handle regulation of financial businesses that are inbound from the EU following Brexit – should there be a no deal scenario – and regulated firms need to be be aware of the implications, warns KPMG in its latest note on Brexit related issues.
The UK’s Financial Conduct Authority in fact launched two consultations on Brexit related issues recently. On 10 October, it proposed changes to the FCA Handbook and technical standards. The other relates to the planned TPR.
Should a no deal Brexit go ahead, then the current passporting regime would no longer apply for firms based in the European Economic Area to continue distributing funds such as AIFs and Ucits. The TPR would allow “relevant EEA firms and investment funds to continue to access the UK market while seeking full authorisation or recognition in the UK,” KPMG wrote.
“The consultation paper sets out how the FCA expects the regime to work in practice, how firms and funds can enter it, how long it will operate for, and the rules they propose should apply to firms and fund marketing activities during the regime.”
“The TPR will be available to EEA firms and funds as from January 2019 and will close before the exit day (exact dates and times will be confirmed by the FCA). The entities are expected to notify their intention online to receive a temporary permission to market in the UK. Information on how to complete the notification process will be made available by the FCA. After the exit day, the TPR will no longer be available.”
Not doing anything is not an option in this circumstance, KPMG further warns.
“If the TPR is not processed during January–March 2019, the funds will lose the marketing passport in the UK and will have to cease any marketing operation.”
Further details on the two consultations are available here. Both are open until 7 December 2018.