Global menu

Our global pages

Close
Flowcharts to help navigate the UK temporary permissions regime (“TPR”) – if the Withdrawal Agreement and transition period do not come into effect

Flowcharts to help navigate the UK temporary permissions regime (“TPR”) – if the Withdrawal Agreement and transition period do not come into effect

  • United Kingdom
  • Financial services and markets regulation
  • Financial institutions

07-01-2019

The temporary permissions regime (“TPR”) will enable EEA firms and funds which passport into the UK to continue operating in the UK if the existing passporting regime falls away abruptly when the UK leaves the EU. Firms will need to notify the FCA that they wish to use the TPR via the FCA’s Connect system and notifications will need to be submitted between 7 January 2019 and 28 March 2019. We have prepared flowcharts for both firms and funds to help navigate the regime.

What is the TPR?

The TPR will allow inbound passporting EEA firms to continue operating in the UK within the scope of their current permissions for a limited period after 29 March 2019 (“Exit Day”), while seeking full UK authorisation. It will also allow EEA funds already reorganised in the UK under a passport to continue temporarily marketing in the UK.

Firms

• The TPR provides for a continuation of the passporting rights of EEA firms currently passporting into the UK under the Financial Services and Markets Act 2000 (“FSMA”)

• Firms must notify the FCA of their interest in taking part in the TPR

o Notification is via the FCA’s Connect system

o Notifications can be made between 7 January 2019 and 28 March 2019 (inclusive of both dates)

• Firms in the TPR will be treated as if they have permission under Part 4A of FSMA to carry on the relevant regulated activities in the UK

• To the extent that a firm’s passport covers regulated activities, the TPR will allow a firm to continue to undertake all those activities.

Firms which can use the TPR are:

• Firms which have passports under Schedule 3 to FSMA in place before Exit Day, including firms with top-up permission

• Treaty firms under Schedule 4 to FSMA which qualify for authorisation before Exit Day, including firms with top-up permission

• Electronic money and payment institutions who are exercising their passporting rights under the Electronic Money Directive (“EMD”) or the Payment Services Directive (“PSD2”) before Exit Day.

These rights could be on a freedom of establishment basis, a freedom to provide services basis or both.

Gibraltar-based firms that passport into the UK will not need to use the temporary permissions regime and will be able to continue to operate as they do now post-Brexit until 2020.

To view our flowchart of how the TPR process will work for firms, including key dates and steps, click here.

Funds

• The TPR will:

o temporarily recognise EEA UCITS funds or sub-funds to allow them to continue marketing to new and existing UK retail investors

o cover sub-funds added to an umbrella that has used the TPR even if that sub-fund is added after the UK has left the EU

o allow EEA AIFs (including EuSEF, EuVECA, ELTIFs and MMFs) to be temporarily marketed in the UK on the same basis as they were before Exit Day

• Fund managers must notify the FCA of their interest in taking part in the TPR

o Notification is via the FCA’s Connect system

o Notifications can be made between early January 2019 and will close prior to Exit Day

• Non-UK domiciled EEA funds will need to either be recognised under s.272 FSMA or registered under the national private placement regime (“NPPR”) to be marketed in the UK after Exit Day (if temporary permission is not sought)

• Fund managers/firms that do not notify the FCA during the TPR notification window must cease to market the fund in the UK at 11pm on Exit Day.

To view our flowchart of how the TPR process will work for funds, click here.

When will it apply?

• From 29 March 2019, if the UK leaves the EU without either a withdrawal agreement that includes a transition period or without any withdrawal agreement at all

• The TPR will initially last for three years, and may be extended by the Treasury for up to a further year

• During that period it is anticipated there will be six “landing slots” of three months each during which funds and firms will be required to obtain full authorisation

o Which slot a firm or fund will get will depend on their size and the risk in their business, with larger firms and funds and firms and funds that carry greater risk to the UK financial system at the front of the queue

o On that basis we expect most asset managers and funds to be towards the back of the queue

• Firms and funds which fail to obtain full authorisation during their landing slot will no longer be covered by the TPR

• It is legitimate to give notice to participate in the TPR with no intention to obtain full authorisation and to use the TPR period to wind down any UK business or sales activity.

To visit the FCA’s TPR webpage, click here, and for the FCA’s update of 7 January 2019, click here.

How Eversheds Sutherland can help

Since June 2016, our lawyers, consultants and International Funds Net (IFN) 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.

We would be happy to discuss how we can help you with your Brexit planning and execution of those plans.

For more information contact

< Go back

Print Friendly and PDF
Subscribe to e-briefings