Since the end of the BREXIT transitional period on 31 December 2020, we have received quite a few queries from firms asking if and how they can continue to service clients in Spain or France or another EEA country now that passporting is no longer available for UK firms.
In the months leading up first to the BREXIT withdrawal and then to the end of transition, the FCA created transitional arrangements and a temporary permissions regime for EEA firms wishing to continue to operate in the UK. Given the importance of London as a financial centre, this was not an entirely altruistic act on the part of the UK Regulator yet there was no reciprocation from regulatory authorities in the EEA for UK firms.
EEA transitional regimes
Several EEA states have now introduced temporary measures for UK firms providing financial services in the EEA. The FCA has updated its information about Brexit from EEA regulators to include these temporary measures where they exist. To date, it appears that 14 of the 27 jurisdictions have published details of transitional arrangements. Details can be found here.
We have looked at a few of the jurisdictions and some of the content is, unsurprisingly, in the language of the relevant country, although a few of the links have English language versions. Firms accessing the links need to be prepared to roll out Google Translate or similar!
The list is not exhaustive, and firms doing business in the EEA should check directly with the relevant national regulator to make sure they act in accordance with their expectations and the jurisdiction’s local laws.
Passporting problem solved?
Unfortunately, no. Although we have not reviewed every link in detail, the temporary arrangements appear to be aimed at the level of funds and investment management. Advisers seeking to undertake cross border activity, for example advising or servicing a few clients dotted around the EEA, does not appear to be considered.
Accordingly, our recommendation to such firms remains as we have previously stated, namely that firms need to liaise with the regulator in the relevant jurisdiction to identify the requirements for providing advice to clients resident in the EEA.