MFSA Circular to the Industry on Brexit
On the 18th of November 2020, the Malta Financial Services Authority (MFSA) has issued a circular addressed to licensed Insurance, Investments, Credit and Financial Institutions, providing guidance on the measures to be taken in light of the end of the Brexit transition period on 31st December 2020, whereby EU law will no longer apply in the United Kingdom.
The aim of this Circular is to outline the expectations regarding the preparation and implementation of contingency plans, ensuring adherence to the applicable EU legislation, whilst keeping clients informed of any changes that will affect them.
The MFSA also outlined an update to entities licensed in the UK providing services in Malta in its circular. Upon the expiry of the transition period, all UK licensed entities can no longer provide financial services in Malta through the freedom of services and/or establishment. Such entities have been advised to obtain the necessary authorisation in Malta or in another EU Member State. Clients must be provided the necessary information about availability of services, alternative arrangements and contact details in case of enquiries.
In relation to UK Investment Firms and Investment Funds, the previous communication on a temporary permission regime (TPR) for investment firms and investment funds in the case of a no-deal Brexit issued by the MFSA is no longer applicable. The options outlined by the MFSA for such firms are:
- To terminate the existing contracts in an orderly manner;
- Obtain the necessary authorization;
- Proceed with the assignment of the existing contracts to a duly authorized entity.
UK UCITS and AIFs Marketed in Malta as from 1st January 2021 shall be considered non-EU AIFs and are permitted to be marketed in Malta under the National Private Placement Regime (NPPR), and subject to the notification procedures established in the AIFMD. The MFSA has started accepting applications under the NPPR as of the 18th November 2020.
The MFSA has also issued a letter for UK/Gibraltar insurance undertakings and insurance intermediaries conducting business of insurance in Malta through freedom of services and freedom of establishment. The letter informs such undertakings and intermediaries that they cannot conclude new insurance contracts or establish, renew, extend, increase or resume insurance cover under the existing insurance contracts in Malta without obtaining authorisation from the MFSA.
Maltese Licence Holders Providing Services in the UK
Such firms that wish to continue providing financial services in the UK should do so in accordance with the guidance provided by the relevant UK financial services regulator. Such license holders need to apply to join the relevant UK TPR prior to 31st December 2020. Following the end of the transition period, the MFSA’s Financial Services Register will remove any reference to passporting activities of licensed entities in or out of the UK.
To read the full Circular to the Industry on Brexit Readiness Click Here.
For more information on how Zeta can assist you please contact our Business Development team on bd@zeta-financial.com.