As the March 29 deadline for Brexit comes ever closer, parties with interests in the matter must step up their preparations for this event. By means of a circular dated 11 January, The Malta Financial Services Authority (MFSA) is drawing the attention of fund managers and investment firms licensed in Malta (Maltese Licensed Entities) that are currently passporting into the UK that they need to apply to the UK Financial Conduct Authority (FCA) under the Temporary Permissions Regime (TPR) so that they may carry on conducting their business within the scope of their current permissions in the UK. Maltese Licensed Entities currently passporting into the UK and intending to continue offering their services in the UK need to apply for the TPR through the FCA ‘Connect system’. This notification will expire on March 28, on the eve of Brexit.
Passporting is an EU system that allows banks and financial services companies to operate in any EU and EEA countries if they are already authorised to operate in any one of them. There are nine such passports and together these form the framework for the EU single market in financial services. A member state acquires each passport by adopting a particular regulatory framework related to financial services into national law. Once such a regulatory framework is adopted, a member state achieves the passport related to that framework and firms licensed in that member state to operate under that regulatory framework can carry out the same operations in any other state of the EU and the EEA with minimal additional authorisation. States outside the EU do not have the opportunity of adopting these passports although there is a ‘third-party regime’ that gives firms of countries that the EU accepts has equivalent regimes to such a passport, to offer some services in the EU, but these are heavily limited in scope and extension. Once Brexit takes place, not only will the UK will fall out of this system, affecting not only the ability of its businesses to offer their services in the UK, but EU businesses too will lose their passporting rights into the UK. Unless Maltese Licensed Entities apply for the TPR, they will be unable to continue offering their services in the UK.
Click here to read the full circular issued by the MFSA dated 11th January 2019 with reference to the UK FCA Temporary Permissions Regime.