On 11 March 2020, HM Treasury published a consultation paper setting out proposals to introduce new market access arrangements for financial services between the UK and Gibraltar.
Gibraltar was not a Member State of the EU in its own right. In EU law, Gibraltar was classified as a European territory for whose external relations a Member State (the UK) was responsible. It is through the UK’s responsibility for its external relations that the EU treaties applied to Gibraltar, and in turn the European Economic Area (EEA) agreement. Gibraltar was not in its own right a party to the EEA agreement, but was treated for the purposes of the EU and the EEA as part of the UK. EU law applied to Gibraltar by virtue of Gibraltar’s own European Communities Act 1972 and, under the Withdrawal Agreement, EU law will continue to apply during the transition period.
In the consultation paper HM Treasury:
- sets out the background to the UK-Gibraltar financial services relationship, and the institutional framework that underpins the existing market access arrangements; and
- invites views on key features of the proposed Gibraltar Authorisation Regime (GAR), such as the arrangements to access and exit the GAR regime, and the consumer protection obligations on firms operating in the UK market.
The Government is proposing a new framework (the GAR) that will allow Gibraltar-based financial services firms to access the UK market as “authorised persons” under the Financial Services and Market Act 2000, without having to apply for full UK authorisation from the UK regulators. At the core of the regime, HM Treasury will specify by statutory instrument the UK regulated activities for which market access is granted, and the corresponding activities that a firm wishing to conduct these activities in the UK must already be authorised by the Gibraltar Financial Services Commission to carry on in Gibraltar. A Gibraltar-based person could carry on a specified regulated activity in the UK only to the extent provided for by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO).
It is expected that the specified activities will be a subset of the regulated activities under the RAO, reflecting the composition of Gibraltarian firms currently conducting business in the UK. Firms authorised under the GAR will be able to carry on the regulated activity on a cross-border service basis and/or via a UK branch. For the purposes of this consultation, references to Gibraltarian firms also apply to individuals.
The granting of access will be dependent upon Gibraltar agreeing to meet certain requirements in respect of alignment and cooperation which are further described in the consultation paper.
The deadline for comments on the consultation paper is 11 May 2020.