With the Brexit deadline quickly approaching, UK financial institutions are busy making plans.
The Financial Conduct Authority (FCA) will have its hands full and has taken steps already by announcing that its contingency plan is now open for notifications.
The FCA is offering a temporary permissions regime which will allow firms to operate without the need for further authorizations for a brief time.
Free Travel
According to the FCA, the temporary permissions regime will give firms that operate in the European Union a grace period for easier entry into the UK. During this period, they should be seeking full FCA authorization for entry into the UK.
Firms that operate in the EU and that have registered with the European Economic Area (EEA) have the right to do business in other EEA countries without needing additional requirements. This benefit has been used a lot by UK businesses and financial institutions in their entry to the European market as well as by European firms to make inroads into the UK.
The trouble is with Brexit, all of these benefits go away soon. A negotiated Brexit would have something in place to replace that. However, with no deal on the horizon on Brexit, businesses may end up facing a hard Brexit and that could pose them many challenges. This is why the FCA is implementing this temporary plan to ensure that there is a smooth transition.
Meeting The Deadline
To be part of the system though, businesses will have to notify the FCA before March 28, 2019. The notification is free of charge. Additionally, fund managers will need to specify which funds they will be marketing in the UK.
In a statement, the FCA said
Once the notification window has closed, fund managers that have not submitted a notification for a fund will be unable to use the temporary permissions marketing regime for that fund. They will not be able to continue marketing that fund in the UK on the same basis as they did before exit day.
There will be a few exceptions to the blocking. These are any new sub-funds of EEA UCITS that are in the temporary permissions marketing regime on exit day. If a fund manager is in charge of these sub-funds, then they can ask for entry into the program after Brexit happens.
Brexit is on the horizon and many UK businesses are bracing for a hard Brexit as it looks highly unlikely that a deal will be reached before the deadline.
