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FCA sets out process for firms wishing to cancel a temporary permission

  • United Kingdom
  • Financial services and markets regulation
  • Investment funds and asset management
  • Financial services - Asset managers and funds

13-09-2022

On 1 September 2022, the FCA updated its webpage “Cancelling a temporary permission” with details of how firms in the temporary permissions regime (“TPR”) or the supervised run-off (“SRO”) regime can cancel their temporary permission. 

The processes

Firms which had previously passported into the UK under FSMA Schedule 3 were entitled to join the TPR or SRO. 

Such firms in the TPR or SRO that no longer have business which requires them to have UK permission can apply to the FCA to cancel their temporary permission and leave UK regulation.  The process for cancelling a permission depends upon on the circumstances that apply to the firm.

Circumstance

Applicable Process

 

A firm has closed its UK business (or never had a UK business) and it doesn’t currently intend to seek full authorisation in the UK

 

Use the FCA’s Connect system to cancel the temporary permission

Once such a firm has cancelled its temporary permission it will no longer be able to:

  • carry on regulated activities in the UK (unless an exclusion applies)
  • communicate financial promotions that have an effect in the UK (unless an exemption applies or the firm has its promotions approved by a UK authorised person)
  • approve a financial promotion for another person
  • appoint, or continue to use, any appointed representatives or tied agents to carry on regulated activities in the UK

As part of the cancellation process, the FCA may require the firm to provide:

  • the information required under to in SUP 6.4 in the FCA Handbook:
  • this varies depending upon the precise nature of the firm and its business
  • a report signed by a director
  • a board resolution to confirming the firm’s decision to cancel its authorisation

If following cancellation the firm changes its plans and wants to conduct regulated business in the UK again, it will need to seek authorisation in the UK.  This can take up to 12 months from submitting an application.

Circumstance

Applicable Process

 

A firm wants to cancel its temporary permission but has UK business to run off

Complete a TPR to SRO cancellation form and email it to the FCA at TPQueries@fca.org.uk

 

This applies if the firm:

  • continues to have business that requires carrying on a regulated activity in the UK, and so still needs UK authorisation (unless an exclusion applies)
  • but beyond this does not intend to seek full authorisation in the UK and wants to cancel its temporary permission

Provided the firm continues to have EEA authorisation in its home state, the firm will be able to use the SRO regime to run-off that UK business.  It is the firm’s responsibility to ensure that it qualifies for the SRO regime.

Once the firm has cancelled its temporary permission and moved into SRO, it will no longer be able to:

  • carry on regulated activities in relation to new UK business, and will be limited to the regulated activities which are necessary for the performance of pre-existing contracts only, plus certain limited specified activities
  • generally communicate marketing which would have an effect in the UK

The firm must continue to adhere to the FCA’s Principles for Businesses and the FCA’s Handbook.

On entry into SRO the firm must be ready to include disclosure wording indicating that the firm is now in SRO in letters and electronic communications to UK retail customers.

Once the firm no longer has temporary permission, it will be unable to be the manager, trustee or depositary of certain types of fund or to be the sole director or depositary of an authorised open-ended investment company.

If following entry into the SRO the firm changes its plans and wants to conduct regulated business in the UK again, it will need to seek authorisation in the UK.  This can take up to 12 months from submitting an application.

Circumstance

Applicable Process

 

The firm is in SRO, has closed its UK business and wants to cancel its limited permission

 

Use the FCA’s Connect system to cancel the limited permission

Once the firm has cancelled its temporary permission it will no longer be able to:

  • carry on regulated activities in the UK (unless an exclusion applies)
  • communicate financial promotions that have an effect in the UK (unless an exemption applies) or the firm has its promotions approved by a UK authorised person
  • approve a financial promotion for another person
  • appoint, or continue to use, any appointed representatives or tied agents to carry on regulated activities in the UK

Circumstance

Applicable Process

 

The firm is in Contractual Run-off (“CRO”) and has closed its UK business

 

Complete a CRO cancellation form and email it to the FCA at FSCRNotifications@fca.org.uk

 

If the firm no longer has any UK regulated business and wants to cease using the CRO it will no longer be able to:

  • carry on any regulated activities in the UK (unless an exclusion applies)
  • communicate financial promotions that have an effect in the UK (unless an exemption applies) or the firm has its promotions approved by a UK authorised person
  • approve a financial promotion for another person
  • appoint, or continue to use, any appointed representatives or tied agents to carry on regulated activities in the UK

If a former CRO firm changes its plans and wants to conduct regulated business in the UK again, it will need to seek authorisation in the UK.  This can take up to 12 months from submitting an application.

Other types of firms in the TPR, SRO or CRO

There are specific processes that apply to payments institutions, registered account information service providers and electronic money institutions that previously passported into the UK, which the FCA also clarified on its updated webpage.

How Eversheds Sutherland can help

Since June 2016, our lawyers, consultants and International Funds Net (“FundsNet”) team have advised various institutions passporting into the UK from EU Member States and passporting from the UK into the EU on Brexit planning and Brexit related issues.

Please see our recent briefing “Landing slots confirmed: the FCA confirms it has allocated landing slots to all firms known to be applying for full authorisation in the UK” and refer to our updated flowcharts to help navigate the temporary permission regimes:

Flowchart for firms

Flowchart for funds

Flowchart on the options, next steps, requirements and processes for the marketing of funds into the UK from 1 January 2021

For further information on TPR and how this might impact your organisation, please get in touch with your usual Eversheds Sutherland contact or contact the below: