FCA issues direction confirming the notification process under its post-Brexit temporary permissions regime

As previously reported, the UK government and the FCA are proposing to implement a Temporary Permissions Regime (TPR) for “inbound” European Economic Area (EEA) firms and funds in the event of a “no deal” Brexit.  A TPR is proposed both for firms and funds authorised in an EEA country, such as Ireland, and providing investment services or marketing funds to UK customers under EU passporting arrangements prior to the date of the UK’s exit from the EU. The stated intention is to allow such inbound firms and funds to continue operating in the UK within the scope of their current passports for up to three years after a “no deal” Brexit while they apply for full (permanent) UK authorisation or recognition.

On 9 November, the FCA issued a direction under the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 to the effect that EEA firms carrying on regulated activities in the UK under passporting arrangements must notify it if they intend to obtain a deemed permission or variation under the TPR.  

Notifications must be made on the FCA’s Connect system during the period beginning at 9 am on 7 January 2019 and ending on 28 March 2019.   

Read: The FCA’s direction

FCA publishes second Brexit consultation paper

Following publication of its first consultation in October, the FCA has published its promised second consultation paper proposing further changes to be made to the Handbook and EU-derived Binding Technical Standards. These amendments reflect the temporary permissions regime (see item above) among others. The FCA is also consulting on guidance on how non-Handbook guidance should be interpreted after exit day and on its approach to forms appearing in the Handbook.  

The FCA states that this consultation is not proposing wider policy changes and is not making other changes unrelated to Brexit in the Handbook or Binding Technical Standards.

The closing date for comments is 21 December 2018.  

Read: The second consultation paper

HM Treasury publishes draft regulations for the operation of UK ELTIFs, EuVECAs and EuSEFs after Brexit

HM Treasury has published drafts of the following UK regulations required for the UK to continue to manage after Brexit UK European Long Term Investment Funds (ELTIFs), European Venture Capital Funds (EuVECAs) and European Social Entrepreneurship funds (EuSEFs):

• the Venture Capital Funds (Amendment) (EU Exit) Regulations 2018; 
• the Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2018; and  
• the Long-term Investment Funds (Amendment) (EU Exit) Regulations 2018.

These are to amend retained EU law in relation to these funds. They remove existing legislative provisions relating to co-operation and information sharing with EU authorities while maintaining existing investment rules for these types of funds domiciled in the UK. They also confirm that UK managers will be able to register or be authorised with the FCA to market qualifying funds in the UK under new labels (social entrepreneurship funds (SEF), registered venture capital funds (RVECA) and long-term investment funds (LTIF)). Existing UK managers already registered or authorised with the FCA will be automatically transferred to the new UK regime.

The Regulations are proposed to come into force on exit day.  

Read: The draft regulations here, here and here