On 28 February 2019, HM Treasury published a draft of the Financial Services (Miscellaneous) (Amendment) (EU Exit) (No.2) Regulations 2019. The draft statutory instrument (SI) is part of a wider package of SIs laid by HM Treasury in order to ensure the UK continues to have a functioning financial services regulatory framework after the UK leaves the EU.

The draft SI addresses errors and omissions in earlier SIs, and makes amendments that do not fall within the remit of changes made by other SIs, such as revocations of retained EU law that have no reference in a UK-only context.

In particular the draft SI:

  • amends the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018. A provision is added to place an obligation on firms that enter the contractual run-off (established in amendments made by Financial Service Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019) to inform their UK consumers of their status as an exempt firm, and of any changes to consumer protection;
  • amends the Collective Investment Schemes (Amendment, etc.) (EU Exit) Regulations 2019 and the Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019, references to EEA fund managers, such as references to “AIFM” and “UCITS” are removed from regulation 70 and 71, as EEA fund managers will not be able to enter the contractual run-off;
  • amends the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018. The amendment places additional requirements on EEA firms in the contractual run-off regime (established in amendments made by Financial Service Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019) to notify UK consumers that they have entered the contractual run-off, and disclose any material consumer protection changes post-exit as they arise;
  • adds an additional cancellation criterion to Schedule 3 of the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018, in order to close a gap in the law that meant that EEA account information service providers with temporary deemed registration in the UK were not required to maintain insurance obligations that currently apply to inward passporting EEA firms;
  • introduces a transitional provision in relation to group supervision into the Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019; and
  • corrects a minor drafting error in regulation 2(d) of the Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019 to correct a cross-reference to the Capital Requirements Regulation.

You can track the financial services Brexit EU Exit statutory instruments (as well as gain access to our Brexit resources) on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal. Conformed copies of the EU Exit statutory instruments are available exclusively through our PathfinderPLUS service. To gain access to PathfinderPLUS, please contact Jochen Vester or Simon Lovegrove.