The EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018

Made: 6th November 2018

Coming into force in accordance with regulation 1(2) and (3)

The Treasury make the following Regulations in exercise of the powers conferred by section 8(1) of, paragraph 1 of Schedule 4 to, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 .

In accordance with paragraphs 1(1) and (2) and 12(1) of Schedule 7 to that Act, a draft of this instrument has been laid before, and approved by a resolution of, each House of Parliament.

PART 1 — General provision

Citation, commencement and interpretation

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• (1) These Regulations may be cited as the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018.

• (2) These Regulations come into force on the day after the day on which they are made, subject to paragraph (3).

• (3) Regulations 2 to 4 , 24, 70 and 71 come into force on exit day.

• (4) In these Regulations, “the 2000 Act” means the Financial Services and Markets Act 2000 .

• (5) In these Regulations “Gibraltar firm” means a person whose registered office is in Gibraltar or a person who has no registered office and whose head office is in Gibraltar.

PART 2 — Repeal of passport rights, etc., under Part 3 of the Financial Services and Markets Act 2000

Repeal of passport rights, etc.

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• (1) Part 3 of the 2000 Act (authorisation and exemption) is amended as follows.

• (2) Omit section 31(1)(b) (authorised persons: EEA firms).

• (3) Omit section 31(1)(c) (authorised persons: Treaty firms).

• (4) Omit section 37 (exercise of EEA rights by UK firms).

• (5) In Schedule 3 (EEA passport rights), omit—

• (a) Part 2 (exercise of passport rights by EEA firms);

• (b) Part 3 (exercise of passport rights by UK firms).

• (6) Omit Schedule 4 (Treaty rights).

Consequential amendments

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The Schedule makes consequential amendments—

• (a) in Part 1, to the 2000 Act;

• (b) in Parts 2 and 3, to other enactments.

Saving provision: tax

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For the purposes of an enactment relating to taxation—

• (a) the provision made by these Regulations is to be treated as not having been made, and

• (b) where, by virtue of these Regulations, a person ceases to be a person of a particular description, the person is to be treated as continuing to be a person of that description.

PART 3 — Transitional and saving provision: applications for permission to carry on a regulated activity

CHAPTER 1 — Modifications of Part 4A of the Financial Services and Markets Act 2000

Persons to whom the modifications of Part 4A of the Financial Services and Markets Act 2000 apply

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• (1) The modifications of Part 4A of the 2000 Act (permission to carry on regulated activities) specified in regulation 6 apply—

• (a) before IP completion day, in respect of a person who is authorised to carry on a regulated activity in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act;

• (b) on and after IP completion day, in respect of a person to whom regulation 8 or 11 applies.

• (2) Paragraph (1)(a) only applies in respect of a person if—

• (a) an application for permission, or for the variation of a permission, under Part 4A of the 2000 Act—

• (i) is made by the person on or after the day on which this regulation comes into force, or

• (ii) is made by the person before the day on which this regulation comes into force and has not, immediately before that day, been determined by a regulator in accordance with section 55V of that Act, and

• (b) the application is in respect of carrying on a regulated activity, on or after IP completion day, that the person is authorised to carry on by virtue of section 31(1)(b) or (c) of that Act.

Modifications of Part 4A of the Financial Services and Markets Act 2000

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• (1) Part 4A of the 2000 Act (permission to carry on regulated activities) is modified as follows.

• (2) Section 55A (application for permission) has effect as if—

• (a) in subsection (2), after “subsection (2B)” there were inserted “ and to a direction of the PRA or the FCA given with the consent of the other ”;

• (b) in subsection (3), after “is in force” there were inserted “ , other than a person who is treated as having such a permission by virtue of regulation 8 of the 2018 Regulations, ”.

• (3) Section 55H (variation by FCA at request of authorised person) has effect as if, after subsection (7), there were inserted—

(8) Where a person makes an application to vary the permission that the person is treated as having by virtue of regulation 8 of the 2018 Regulations, the FCA may, if it considers it appropriate to do so, treat the application as an application for permission under section 55A.

• (4) Section 55I (variation by PRA at request of authorised person) has effect as if, after subsection (8), there were inserted—

(9) Where a person makes an application to vary the permission that the person is treated as having by virtue of regulation 8 of the 2018 Regulations, the PRA may, if it considers it appropriate to do so, treat the application as an application for permission under section 55A.

• (5) Section 55J (variation or cancellation on initiative of regulator) has effect as if, after subsection (1) there were inserted—

(1A) Either regulator may exercise its power under this section in relation to— (a) a person to whom regulation 8 of the 2018 Regulations applies, if the person has not made an application for permission under this Part before the end of the period during which, in accordance with section 55U(4)(c), such an application must be made; (b) a person to whom regulation 11 of those Regulations applies, if the person has not made an application to vary a permission under this Part before the end of the period during which, in accordance with section 55U(4)(c), such an application must be made.

• (6) Section 55U (applications under Part 4A) has effect as if—

• (a) in subsection (4), after paragraph (b), there were inserted—

and (c) be made— (i) during such period, ending no later than two years beginning with the day on which IP completion day occurs, as the regulator to which it is to be made may direct, or (ii) if the regulator to which it is to be made does not direct such a period, before the end of two years beginning with the day on which IP completion day occurs.

• (b) after subsection (4), there were inserted—

(4A) The power to give a direction under subsection (4)(c) includes the power— (a) to give different directions in relation to different persons or categories of person; (b) to vary or revoke a previous direction.

• (7) Section 55V (determination of applications) has effect as if—

• (a) in subsection (1), for the words from “6 months” to the end there were substituted “ three years beginning with the day on which IP completion day occurs. ”;

• (b) in subsection (2), for the words from “12 months” to the end there were substituted “ three years beginning with the day on which IP completion day occurs. ”;

• (c) after subsection (6) there were inserted—

(6A) For the purposes of subsection (6), in the case of a person to whom regulation 8 or 11 of the 2018 Regulations applies, the date stated must be a date that falls before the end of the period of three years beginning with the day on which IP completion day occurs.

• (8) Section 55X (determination of applications: warning notices and decision notices) has effect as if, after subsection (4), there were inserted—

(4A) If a regulator decides to refuse an application under this Part, the decision notice must, where applicable, state the day on which regulation 8 or 11 of the 2018 Regulations ceases to apply. (4B) For the purposes of subsection (4A), the day stated must be a day that falls before the end of the period of three years beginning with the day on which IP completion day occurs.

• (9) Section 55Z (cancellation of Part 4A permission: procedure) has effect as if, after subsection (2), there were inserted—

(3) If a regulator gives a decision notice under subsection (2) in circumstances where a person to whom regulation 8 or 11 of the 2018 Regulations applies— (a) has not made an application in accordance with section 55U(4)— (i) in the case of a person to whom regulation 8 of those Regulations applies, for permission under this Part, or (ii) in the case of a person to whom regulation 11 of those Regulations applies, to vary a permission under this Part, or (b) has made such an application but has withdrawn it without submitting another, the notice must state the day on which regulation 8 or 11 ceases to apply. (4) For the purposes of subsection (3), the day stated must be a day that falls before the end of the period of three years beginning with the day on which IP completion day occurs.

• (10) Section 55Z4 (interpretation of Part 4A) has effect as if, at the appropriate place, there were inserted—

“the 2018 Regulations” means the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018;

Persons who cease to be authorised to carry on a regulated activity before IP completion day

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• (1) The modification of Part 4A of the 2000 Act specified in paragraph (2) applies in respect of a person to whom, before IP completion day, regulation 5(1)(a) ceases to apply.

• (2) Section 55V (determination of applications) has effect as if, in subsections (1) and (2), for the words from “it received” to the end there were substituted “ regulation 5(1)(a) of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 ceased to apply to the applicant. ”

CHAPTER 2 — Temporary permission to carry on a regulated activity

Deemed permission under Part 4A of the Financial Services and Markets Act 2000

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• (1) A person to whom this regulation applies shall be treated as if the person has permission to carry on a regulated activity in the United Kingdom under Part 4A of the 2000 Act.

• (2) The regulated activity a person is permitted to carry on by virtue of this regulation is one which, immediately before IP completion day, the person is authorised to carry on in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act.

• (3) Reference in an enactment to a person with permission under Part 4A of the 2000 Act (however expressed) is to be read, unless the contrary intention appears, as including a person treated as having permission to carry on a regulated activity under that Part by virtue of this regulation.

• (4) Accordingly, a power of a regulator under the 2000 Act is exercisable in respect of such a person, and a regulated activity the person is permitted to carry on by virtue of this regulation, as it is in respect of a person with permission under Part 4A of that Act, and a regulated activity the person is permitted to carry on by virtue of Part 4A of that Act.

• (5) Such a power is exercisable in relation to, in particular—

• (a) the variation or cancellation of a permission to carry on a regulated activity, or

• (b) the imposition of requirements, prohibitions or restrictions on a person who has such a permission.

Application of regulation 8

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• (1) Regulation 8 applies to a person who—

• (a) satisfies the conditions in regulation 10, and

• (b) has taken one of the steps set out in regulation 14.

• (2) Regulation 8 applies to such a person for the period determined in accordance with regulation 17.

Conditions to be satisfied for regulation 8 to apply

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The conditions are that, immediately before IP completion day, the person—

• (a) is authorised to carry on a regulated activity in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act, ...

• (b) is not authorised to carry on a regulated activity by virtue of section 31(1)(a) of that Act,and

• (c) is not a Gibraltar firm.

CHAPTER 3 — Temporary variation to carry on additional regulated activity

Deemed variation under Part 4A of the Financial Services and Markets Act 2000

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• (1) A person to whom this regulation applies shall be treated as if the person's permission to carry on a regulated activity in the United Kingdom under Part 4A of the 2000 Act were varied.

• (2) The variation is that the regulated activity the person is permitted to carry on includes one which, immediately before IP completion day, the person is authorised to carry on in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act.

• (3) Reference in an enactment to a person's permission under Part 4A of the 2000 Act (however expressed) is to be read, unless the contrary intention appears, as including a regulated activity which is included in the person's permission by virtue of this regulation.

• (4) Accordingly, a power of a regulator under the 2000 Act is exercisable in respect of such a person, and a regulated activity the person is permitted to carry on by virtue of this regulation, as it is in respect of the person, and a regulated activity the person is, immediately before IP completion day, permitted to carry on by virtue of Part 4A of that Act.

• (5) Such a power is exercisable in relation to, in particular—

• (a) the variation or cancellation of a permission to carry on a regulated activity, or

• (b) the imposition of requirements, prohibitions or restrictions on a person who has such a permission.

Application of regulation 11

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• (1) Regulation 11 applies to a person who—

• (a) satisfies the conditions in regulation 13, and

• (b) has taken one of the steps set out in regulation 14.

• (2) Regulation 11 applies to such a person for the period determined in accordance with regulation 17.

Conditions to be satisfied for regulation 11 to apply

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The conditions are that, immediately before IP completion day, the person—

• (a) is authorised to carry on a regulated activity in the United Kingdom by virtue of section 31(1)(b) or (c) of the 2000 Act, ...

• (b) is also authorised to carry on a regulated activity by virtue of section 31(1)(a) of that Act, and

• (c) is not a Gibraltar firm.

CHAPTER 4 — Temporary permission and variation: procedure, etc.

Steps to be taken before exit day: application or notification

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• (1) For the purposes of regulations 9(1)(b) and 12(1)(b), the steps are that the person has, before IP completion day—

• (a) made an application—

• (i) in the case of a person who satisfies the conditions in regulation 10, for permission under Part 4A of that Act, or

• (ii) in the case of a person who satisfies the conditions in regulation 13, for a variation of such a permission,

which has, immediately before IP completion day, not been withdrawn by the person or determined by a regulator in accordance with section 55V of that Act, or

• (b) notified the relevant regulator that the person wishes to be treated in accordance with regulation 8 or 11.

• (2) For the purposes of paragraph (1)(b), the notification must—

• (a) be made in such manner, and during such period, and

• (b) contain, or be accompanied by, such information,

as the relevant regulator may direct.

Regulator's response

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• (1) In the case of an application referred to in regulation 14(1)(a), the relevant regulator must—

• (a) if it considers that—

• (i) the requirements of section 55U of the 2000 Act (applications under Part 4A: procedure) are satisfied, or

• (ii) the requirements of that section are satisfied with the exception of those provided by subsection (4), and it would not be practicable for the applicant to comply with the requirements of that subsection before IP completion day,

confirm in writing to the person making the application that regulation 8 or 11 is to apply;

• (b) if it considers otherwise, confirm in writing to the person making the application that regulation 8 or 11 is not to apply, giving details of the requirements that are not satisfied.

• (2) In the case of a notification referred to in regulation 14(1)(b)—

• (a) if the relevant regulator has not made a direction under regulation 14(2), the relevant regulator must confirm in writing to the person submitting the notification that regulation 8 or 11 is to apply;

• (b) if the relevant regulator has made a direction under regulation 14(2), paragraph (3) applies.

• (3) Where this paragraph applies, the relevant regulator must—

• (a) if it considers that—

• (i) the notification is made in accordance with the direction, or

• (ii) the notification is not made in accordance with the direction, and it would not be practicable for the applicant to comply with the direction before IP completion day,

confirm in writing to the person submitting the notification that regulation 8 or 11 is to apply;

• (b) if it considers otherwise, confirm in writing to the person submitting the notification that regulation 8 or 11 is not to apply, giving details of the direction that has not been complied with.

Further information to be supplied by a person to whom regulation 8 or 11 applies

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• (1) A person to whom regulation 8 or 11 applies must notify the relevant regulator if—

• (a) any information contained in or accompanying a notification submitted in accordance with regulation 14(1)(b) changes, or

• (b) an authorisation by a home state regulator is cancelled or varied.

• (2) For the purposes of paragraph (1), the notification must—

• (a) be made in such manner, and during such period, and

• (b) contain, or be accompanied by, such information,

as the relevant regulator may direct.

CHAPTER 5 — Temporary permission and variation: duration