HM Treasury has submitted draft regulations outlining temporary permissions for incoming financial services firms currently operating in the UK from European Economic Area (EEA) member states, in the event of a “no deal” Brexit.
Currently, the EU passporting regime allows financial services firms operating from any EEA member state to conduct permitted business activities in any other member state and ideally, these will continue for a transitional period following UK withdrawal which will allow firms to make alternative arrangements. A “no deal” Brexit would end current arrangements abruptly on exit day.
The draft regulations, known as the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 are currently under consideration in Parliament. The intention of the temporary passport regime is to allow EEA financial services firms who are currently operating in the UK to continue to conduct business with current permissions for a defined period of time following a “no deal” arrangement, allowing firms time to seek arrangements to obtain UK authorisation.
Whilst we are uncertain what the extent and impact of Brexit will be, it is promising to see that regulators and the government are working alongside one another to produce various measures to ensure some initial stability and temporary certainty for the insurance industry.
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It will allow inbound firms to continue operating in the UK within the scope of their current permissions for a limited period after exit day, while seeking full UK authorisation. It will also allow funds with a passport to continue temporarily marketing in the UK.