At the time of writing, whether the UK will exit the European Union in the near future remains extremely uncertain. Equally uncertain is what form Brexit will take – here ‘no deal’ remains a possibility, as does the Prime Minister’s deal, even though the House of Commons has twice voted down this agreement by 230 and 149 votes respectively. A third vote on the deal is planned in the House on March 29. A softer form of Brexit, such as a permanent customs union and/or Norway-style membership of the single market, are also still on the table.
The only thing we do know for certain is that the UK will no longer be leaving on March 29, and at present Brexit day is set for April 12, although another extension is still possible. Firms need to know that the UK could still exit without a deal in the second week of April.
The Financial Conduct Authority (FCA) has confirmed that if there is a transition period following Brexit day that the existing passporting regime will continue throughout this period. Passporting allows firms based in the UK to carry out financial services in other EU and European Economic Area countries without requiring authorisation from the appropriate European national regulator. The Prime Minister’s deal includes provision for a 21-month transition, and it can be assumed there will also be a transition period of similar length if Parliament was to approve an alternative Brexit deal.
However, if the UK exits without a deal, then there will be no transition period, simply because there will be no agreed UK-EU relationship to ‘transition’ towards. In the event of no deal, passporting will therefore end abruptly.
The FCA has put in place a Temporary Permissions Regime to allow European firms to continue to operate in the UK should there be no deal. This Regime requires firms to register for temporary permission with the FCA, then at a later date, it can submit a full authorisation application to continue trading in the UK in the longer term.
Unfortunately, not all EU member states have put in place similar arrangements. However, UK-based firms that have operations in one of these countries – Germany, Spain, France, Ireland, Italy, Luxembourg and the Netherlands – can register for temporary permission with the appropriate national regulators.
The Personal Investment Management & Financial Advice Association (PIMFA) has been making its views on Brexit known for some time, and on hearing that Brexit day had been delayed, it again expressed the hope that the Brexit adjustment process for member firms would be as painless as possible.
John Barrass, PIMFA’s Deputy CEO, commented:
“PIMFA has actively campaigned for a transition period close to the status quo on the UK’s departure from the EU that would allow time for adjustments before moving to full 3rd country status. We have also made clear the need for minimal disruption of business to PIMFA member firms, and for a smooth changeover to the new UK/EU relationship that will prevail once the transition period is ended. This will help ensure that the families and individuals whose finances our firms manage and assist with across the nation will experience minimal adverse consequences from the change.
“A sensibly managed withdrawal is thus of critical importance for our firms and their clients and will help the UK retain its standing as the world’s second largest centre for private wealth management and financial advice.”
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article