As the dust around Brexit just begins to settle, approximately 1,500 firms have firmly expressed to the FCA, their interest in carrying out business in the UK. In light of the United Kingdom’s exit from the European Union, a framework was established to facilitate a smooth transition for EU-based firms that operate in the UK. The aforementioned firms provide services of a financial nature were required to reach out to the Financial Conduct Authority (FCA) for approval to conduct business within this jurisdiction.
End of the transition period
Up until 31st December 2020 (the end of the transition period), the Temporary Permissions Regime (TPR) allowed financial service providers within the European Economic Area (EEA) to notify the FCA of their intention to begin/continue doing business in the UK. Additionally, the UK government created the Financial Services Contract Regime (FSCR) that allows firms in the EEA to honor any agreements they had in the UK prior to Brexit. To regulate investment funds based in the EEA, the Temporary Marketing Permissions Regime (TPMR) was also put in place. However, it was a requirement that all these firms use this opportunity provided for by the TPR to seek authorization from the Prudential Regulation Authority (PRA) or the FCA if required. The permission is valid for a period of three years and a firm would be able to exit the TPR as soon as their application to operate legally in the UK is approved or rejected.
A sign of good things to come
This sort of interest that the companies have expressed in carrying out business in the UK is a clear indication that despite leaving the EU, UK remains a key economic hub in Europe.
It is important to note that more firms coming into the UK automatically translates into more business opportunities for professionals within the local population. Among the 1,500 firms were over 400 companies carrying out insurance-related business and over 100 wholesale and retail banks that would be setting up shop for the first time in the UK. If you would like to confirm if any of the financial trading services firms that have just begun doing business in the UK, please visit tradingguide.co.uk fca broker page. Out of all these firms, the majority applications originated from Ireland, France and Germany. Gibraltar-based firms that already had existing business in the UK were not required to go through this process with the FCA since both governments are working jointly on a framework that will continue to facilitate trade between them.
The FCA outlines a number of principles for business that will regulate the conduct of all new and existing financial services firms in the UK. They include but are not limited to Financial Prudence, Integrity, responsible management of client assets and healthy working relationships with regulators. Detailed information on this can be found in the guidance handbook provided by the FCA. Fees and levies that need to be paid to the FCA are calculated and paid based on their tariff data. Another key area addressed by the FCA pertains to firms that wish to cancel temporary permission and the implications of making this decision. The FCA has also stated that UK firms that carry out business in the EEA are expected to comply with the laws that exist within that jurisdiction.
The Financial Services Compensation Scheme (FSCS) has been directed by the UK government to extend their services to firms in the TPR provided that the said firms have a UK branch. As such, consumers of services offered by TPR firms are protected in the event of any uncertainty that would come at the end of the transitional passporting period. Of course, this means that the TPR firms are required to contribute to the FCSC just as UK firms would.