The Temporary Permissions Regime (“TPR”) will enable relevant firms and funds which passport into the UK to continue operating in the UK if the passporting regime comes to an end when the UK leaves the EU.
If there is no transition period, when the UK withdraws from the EU, the UK will become a ‘third-country’ in relation to the EU and EEA firms will no longer be able to passport into the UK.
As such, EEA firms may need to seek authorisation in the UK to continue to access the UK market. Similarly, EEA investment funds will also need to seek UK recognition to continue to market in the UK.
Under the TPR, EEA firms currently passporting into the UK which notify the FCA will be deemed to have permission under Part 4A of the Financial Services and Markets Act 2000 (FSMA) on a temporary basis. The scope of the permission will reflect the scope of a firm’s passporting permission pre-Brexit.
Separate legislation will enable EEA investment funds to continue to be marketed in the UK during the regime and details of this will be published in by the FCA in due course.
If required, the TPR will come into force when the UK leaves the EU on 29 March 2019 at 23:00. The FCA expects the TPR will be in place for a maximum of three years within which time, investment firms and investment funds will, if required, be required to obtain authorisation or recognition in the UK.
The following firms will be able to use the TPR:
- Firms which have passports under Schedule 3 of FSMA in place before exit day, including firms with top up permissions;
- EEA firms under Schedule 4 of FSMA which qualify for authorisation before exit day, including firms with top-up permissions;
- Electronic money and payment institutions which are exercising their passporting rights under the Electronic Money Directive (EMD) or Payment Services Directive (PSD2) before exit day.
- The following funds can use the TPR:
- UCITS schemes;
- Alternative Investment Funds (including EuVECAs, EuSEFs, ELTIFs and AIFs authorised as MMFs)
Firms which have passports under Schedule 3 to FSMA or Treaty firms under Schedule 4 to FSMA will need to notify the FCA that they wish to use the TPR. Notifications need to be submitted via the FCA’s Connect system between 7 January 2019 and 28 March 2019.
Firms of the same type with a top-up permission also need to notify the FCA, in the same manner, that they wish to use the TPR to ensure that the part of their permission that relies on passporting continues.
Once the period in which notifications can be made ends, firms that have not submitted a notification will not be able to use the TPR.
The FCA expects that the TPR will work in a similar way for investment funds, with fund managers notifying the FCA of which funds they want to continue to market in the UK. The FCA expects to start accepting notifications from 7 January 2019 up to and including the 28 March 2019.