HM Treasury has proposed a Temporary Permissions Regime (“TPR“) as a temporary measure to replace the passporting regime in Schedule 3 and 4 of the Financial Services and Markets Act 2000 (“FSMA“) in the event of a no-deal Brexit. The legislative framework for the TPR is found in the EEA Passport Rights (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (SI 2018/1149), enacted on 6 November 2018.
Under the TPR, EEA firms which currently operate in the UK under the FSMA passporting regime may, after exit day, be treated as if they had domestic authorisation under Part 4A of FSMA to carry on the same regulated activities they currently carry on. The TPR is an opt-in regime: firms must, between 7 January and 28 March 2019, either make an application for authorisation under Part 4A of FSMA or notify the relevant regulator.
Notably, the TPR is a one-way street: it will enable EEA firms to continue to operate in the UK, but it will not enable UK firms to continue to operate in the EEA. At the moment there is no indication that the EU or individual member states generally are considering implementing their own reciprocal regimes.
In August, the Financial Conduct Authority (“FCA“) and the Prudential Regulation Authority (“PRA“) published papers outlining their approach to implementing the TPR. On 11 October 2018 the FCA published a consultation paper on the TPR for inbound firms and on 25 October 2018 the PRA published a similar consultation paper and an information webpage. Details of the proposed changes are described below. The FCA’s proposed changes will be relevant to both insurers and insurance intermediaries (“firms“) unless specified otherwise, but the PRA’s proposed changes will only be relevant to insurers.
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