Asset Management & Investment Funds Q&A: Aug 2018

Question

What is the latest guidance from the UK Financial Conduct Authority (FCA) for inbound passporting EEA firms and funds who wish to continue operating in the UK in a hard Brexit scenario?

Answer

The UK FCA has issued an update on its proposed "Temporary Permissions Regime". This will enable inbound passporting EEA firms and funds to continue operating in the UK if the passporting regime falls away abruptly when the UK leaves the EU.

Some key points are set out below.

  •  Firms must notify the FCA that they wish to use the temporary permissions regime. This will be an online process
  • The FCA expects to open the notification window in early January 2019. The notification window will close prior to exit day. Once the notification window has closed, firms that have not submitted a notification will not be able to use the temporary permissions regime
  • The FCA will allocate firms a period (a landing slot) within which they will need to submit their application for UK authorisation. The FCA expects the first landing slot to be October to December 2019 and the last to be January to March 2021
  • Firms with top-up permissions will need to submit a "variation of permissions" application rather than an authorisation application. If firms change their plans they will be able to apply to cancel their temporary permission once they have ceased all UK business
  • Rules which will apply to firms in the regime are detailed on the website together with information on fees

The FCA expects that the regime 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. As with firms, the FCA expects to start accepting notifications in early January 2019 and the notification window will close prior to exit day. Once the notification window has closed, fund managers that have not submitted a notification for a fund will be unable to use the temporary permissions regime for the fund and will not be able to continue marketing the fund in the UK. Details of investment funds with a temporary permission which will continue to be marketed to UK retail investors will be shown on a register. The FCA will provide further information on how funds will exit the temporary permissions regime in due course