TEMPORARY BREXIT PERMISSIONS REGIME – FUND NOTIFICATION WINDOW OPENS
January 9, 2019
The Temporary Permissions Regime (‘TPR’) will allow most EEA-domiciled investment funds to continue to be marketed in the UK to new and existing investors for up to three years in the event of a ‘no deal’ Brexit, where there is no implementation period in place so the existing passporting arrangements between the UK and the EEA cease when the UK leaves the EU on 29 March 2019.
Fund managers wishing to continue to market passported funds in the UK after Brexit can now register for temporary permissions. The Financial Conduct Authority (FCA) notification window for the TPR opened on 7 January 2019, and it will remain open until 28 March 2019.
The TPR will allow EU-based firms and funds which currently access the UK market by way of an inbound ‘passport’ to continue to serve their UK customers for up to three years in the event that the UK exits the EU without a formal implementation period in place, giving them time to apply for full FCA authorisation. No reciprocal temporary permissions regime has yet been proposed by the EU for UK firms and funds which currently rely on outbound passports to serve customers in other EU member states.
Fund managers must notify the FCA which of their passported funds they wish to continue marketing temporarily in the UK under the TPR, via Connect. The FCA has published separate guidance to fund managers on how to notify. Notifying Firms will be given a time period, known as a ‘landing slot’ by the FCA, within which they are to submit their application for UK authorisation or variation of permission (“VOP”) to the FCA. The first ‘landing slots’ will be from October to December 2019 and the last will be from January to March 2021. The FCA will inform firms of their ‘landing slots’ after the UK’s exit from the EU. The FCA has launched a dedicated TPR webpage to explain the regime.
For EEA-domiciled investment funds, the FCA has stated that “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”. It warned that managers will “not be able to continue marketing that fund in the UK on the same basis as they did before exit day” and that “the only exception to this is for new sub-funds of EEA UCITS that are in the temporary permissions marketing regime on exit day”. The FCA stated that it will be possible for such new sub-funds to enter the TPR after exit day. Fund Managers will be obliged to notify the regulator which of the sub-funds they want to enter into the TPR if a fund is divided into sub-funds. The FCA has confirmed there will be no fee for fund managers notifying it of which of their passported funds they wish to continue to market temporarily. Details of investment funds with a temporary permission will also be provided on the FCA Financial Services Register.
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