On 1 July 2020, the FCA updated its web page on the temporary permissions regime (TPR) for inbound passporting EEA firms and funds. The update provides that the TPR will now take effect at the end of the transition period and that the FCA will re-open the notification window on 30 September 2020. This will allow firms and fund managers that have not yet notified the FCA of their intention to enter into the TPR to do so before the end of the transition period. The FCA adds that there will also be an opportunity for fund managers to update their previously submitted notifications, if necessary. The FCA will communicate further on this in September.
The FCA has also published a speech by Nausicaa Delfas (Executive Director of International, FCA) entitled Building a financial regulatory system suitable for the UK in the new era.
In the speech the re-opening of the notification window is mentioned and that from 2021, firms within the TPR will be called to apply for permanent authorisation to replace their temporary permission. The FCA plans to consult later this year on the approach it will take when it assesses applications from overseas firms.
The speech also covers equivalence decisions mentioning that these have not yet been made and negotiations are ongoing. These decisions will impact on some of the post transition period risks – for example, deeming equivalence would mitigate the risks of disruption from overlapping share trading obligations and derivatives trading obligations. However, the FCA is also conscious that other risks are outside its control to mitigate. For instance, where EU Member States had individually passed laws to smooth a possible ‘hard’ exit, some of these laws have now lapsed and there is no guarantee that new laws will be issued. If a firm intends to continue servicing customers in the EEA from 1 January 2021, it needs to have adapted its business according to the local laws and local regulators’ expectations by that date, speaking to local regulators as appropriate, and obtaining permissions and repapering contracts where necessary, whilst treating customers fairly throughout. In short the FCA’s message is that firms need to continue to prepare for a range of scenarios, to be ready for the end of the year.
The speech also touches on after the transition period. The FCA’s approach going forward will be guided by its continued commitment to the highest international standards, and by what is right for the UK’s markets, building on the strengths of the existing UK regulatory and legal system.
The FCA has also published a joint statement between itself and the Swiss Federal Department of Finance on deepening cooperation in financial services. In the statement, the UK and Switzerland state that they intend to conclude a legally binding international agreement on mutual recognition. The agreement is intended to establish mutual recognition of each jurisdiction’s regulatory and supervisory regimes in the fields of insurance, banking, asset management and capital markets, including market infrastructure.