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Key considerations for firms and funds in the FCA’s temporary permissions regime

  • United Kingdom
  • Brexit
  • Financial services disputes and investigations
  • Investment funds and asset management
  • Financial services


The FCA updated its temporary permissions regime (“TPR”) webpages on 31 December 2020 to clarify that the TPR enables relevant EEA firms and funds which were passporting into the UK when the transition period ended to continue operating temporarily in the UK now that the passporting regime has fallen away. 

In this briefing, we highlight some of the key considerations for fund managers, operators and funds in the TPR and temporary marketing permissions regime (“TMPR”).  Please also refer to our updated flowcharts to help navigate the regimes:


As part of the UK’s preparations for Brexit, the UK Government established the TPR for firms based in the EEA, and the TMPR for EEA-based investment funds which passported into the UK.

The TPR allows EEA-based firms which were passporting into the UK at the end of the transition period (31 December 2020) to continue operating in the UK within the scope of their previous passport permission for a limited period after the end of the transition period.  Firms must have notified the FCA that they wanted to join the TPR before the end of the Brexit transition period on 31 December 2020.

During the limited TPR period, these firms must seek full authorisation by the PRA or the FCA to continue to access the UK market.  On 31 December 2020, the FCA published a series of new directions, notifications and forms, which it and firms will need to use now the Brexit transition period has ended.  The FCA specifically directs firms not to apply for authorisation or variation of their permission in the UK until specifically directed to do so by it (i.e. during their allocated ‘landing slot’).  


The TMPR allows certain EEA-based funds which were passporting into the UK at the end of the Brexit transition period to continue to be marketed in the UK in the same manner as they were before the Brexit transition period ended.  Funds must have notified the FCA that they wanted to join the TMPR before the end of the Brexit transition period.

Funds can take advantage of the TMPR for a limited period while seeking UK recognition to continue to market in the UK.  As mentioned above, in line with FCA’s direction, fund managers should not submit an application for the full recognition of a fund in the UK’s TMPR under section 272 of FSMA until specifically directed by the FCA to do so (i.e. during their allocated ‘landing slot’).

Gibraltar-based firms

Gibraltar-based firms can continue to passport into the UK and operate as they did before the end of the transition period until the end of 2021 and do not need to use the TPR.  The UK Government is working with the Government of Gibraltar to design a replacement framework for after 2021.

Rules that apply to firms in the TPR and fund operators in the TMPR

There are a number of rules which firms and fund operators must adhere to while in the TPR/TMPR, including all 11 of the FCA’s Principles for Businesses, which set out the main regulatory obligations and high-level standards that authorised firms must meet.  The FCA expects firms in the TPR to pay particular attention to Principle 11, which requires firms to notify the FCA of anything relating to the firm about which it would reasonably expect notice.  For example, notifications under Principle 11 would include plans to grow/change a UK business, issues with a firm’s financial or operational resilience, or changes in group structure or ownership.

Rules that apply to firms in the TPR that previously passported into the UK under Schedule 3 or Schedule 4 to FSMA

Once in the TPR, firms are treated as having a UK Part 4A permission and fall within the full scope of FCA’s supervision and rule-making powers.  Firms will need to adhere to the FCA’s Principles for Businesses and follow the other relevant rules and guidance in the FCA Handbook:

  • all FCA rules which applied to them when passporting into the UK
  • all FCA rules which implement a requirement of an EU directive – this is relevant if the rule applied to the firm’s home state and therefore did not apply when the firm was passporting into the UK (home state rules).  Here FCA accept ‘substituted compliance’ in respect of these rules.  This means that if a firm can demonstrate that it continues to comply with the equivalent home state rules in respect of its UK business (including where this is on a voluntary basis if the relevant rules have ceased to cover UK business), it will be deemed to comply with FCA rules

TPR firms must also comply with certain additional FCA rules which FCA believe are necessary to provide appropriate consumer protection or relate to funding requirements, including:

Rules around safeguarding client money and custody assets

Under which the FCA requires that:

  • firms report their client assets arrangements
  • investment firms subject to MiFID II must provide FCA with an English translation of their client assets audit reports, either upon request or on receipt of an ‘adverse’ audit report on the adequacy of the firm’s arrangements under its client assets obligations
  • firms disclose certain information to UK clients relating to the treatment of their client assets in the event of the firm’s failure
  • tied agents and appointed representatives of firms subject to MiFID II are prohibited from holding client assets

Status disclosure

Firms in the TPR must include specific status disclosure wording in letters (or electronic equivalents) to UK retail customers to indicate that the firm is in the TPR

Disclosure on compensation scheme coverage

Firms in the TPR should consider and communicate to their customers any material changes in home state investor compensation scheme coverage as a result of the UK’s withdrawal from the European Union.  For example, where that coverage is removed from the UK activities of firms in the TPR.  FCA also expect firms in the TPR to provide, at a customer’s request, information concerning the firm’s inclusion (or not) in any compensation schemes, including the firm’s home state scheme

Senior Managers and Certification Regime

Firms with a UK branch should continue to comply with the requirements of the Senior Managers and Certification Regime (“SM&CR”) as it currently applies to EEA branches.  There are no requirements in this area for firms in the TPR which were previously operating on a cross-border basis.  However, firms should take account of the SM&CR when considering plans to apply for full authorisation in the UK.

Rules that apply to fund operators in the TMPR

Operators, depositories and trustees of funds in the TMPR should continue to comply with the rules that applied to them at the end of the Brexit transition period.

Launching new sub-funds to funds notified under the TMPR


The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (the “CIS Regulations”) created the TMPR for EEA UCITS funds which were already passporting into the UK before the end of the Brexit transition period.  These were extended after the original consultation to new sub-funds.  To use the regime, a sub-fund will need to satisfy the conditions specified in regulation 63(3) of the CIS Regulations:

  • be authorised by its home state regulator on or after 31 December 2020
  • at least one other sub-fund of the new sub-fund’s umbrella scheme must be a recognised scheme in the TMPR
  • the operator of the new sub-fund must notify the FCA that they wish the new sub-fund to enter the TMPR prior to the commencement of its umbrella fund’s landing slot to apply for individual recognition under section 272 of the Financial Services and Markets Act 2000

In order to promote units of a new sub-fund of an umbrella scheme which has entered the TMPR to the general public including retail investors in the UK, the FCA must be notified by pro forma letter and attachments.  Not surprisingly, the information requested in the notification letter is very similar to the information required when notifying the intention to passport within the previous process under the UCITS Directive.


The UK Government has introduced a Temporary Transitional Power (“TTP”) which permits UK financial regulators to continue to apply the same regulatory obligations to EEA financial services firms for a transitional period of 15 months, expiring on 31 March 2022, subject for exceptions for fundamental and prudential rules required to ensure the integrity of the markets and financial system. Where the TTP applies, regulatory obligations on firms will remain broadly the same as they were before the end of the Brexit transition period.

The TTP applies to regulation 57 of the UK AIFM Regulations under which EEA AIFMs market AIFs in the UK.  Accordingly, an EEA AIFM which marketed an AIF under regulation 57 immediately before 11pm on 31 December 2020 can continue to market that AIF in the UK on the same basis as before, until the end of the TTP.  The EEA AIFM will need to re-register the AIF under regulation 59 before the end of the TTP.

Any new AIFs from the EEA to be marketed in the UK, including new sub-funds under an existing umbrella, must be registered under regulation 59.  In practice, this will mean an EEA AIFM that wishes to register a new sub-fund AIF, will have to de-register the existing umbrella registered under regulation 57 and must make a new notification under regulation 58 or regulation 59.

Our Brexit tracker

Our Financial Services Brexit tracker “Helping you through changing times - Our European Brexit tracker for financial services institutions” provides a quick overview of the current position in relation to UK funds and UK fund managers seeking to sell services into EU27 countries after Brexit.

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 EU27 Member States and passporting from the UK into the EU27 on Brexit planning and Brexit related issues.