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

Disapplication of supervision, etc., requirements

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Section 1L(2) and (3) of the 2000 Act (supervision, monitoring and enforcement) does not apply in respect of a person to whom regulation 47 applies.

Exemption from liability in damages

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A function of a regulator under this Part, not being a function under the 2000 Act which the regulator is treated as having by virtue of this Part, is to be treated—

• (a) where the regulator is the FCA, as if it were a function of the FCA for the purposes of paragraph 25 of Schedule 1ZA of the 2000 Act (exemption from liability in damages);

• (b) where the regulator is the PRA, as if it were a function of the PRA for the purposes of paragraph 33 of Schedule 1ZB of that Act (exemption from liability in damages).

CHAPTER 6 — Exemption from the general prohibition: duration

Period during which regulation 47 is to apply

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For the purposes of regulation 48(2), the period is one that begins with the relevant day and ends—

• (a) in so far as a regulated activity in respect of which the exemption in regulation 47 has effect is carried on for—

• (i) the purpose of performing a contract of insurance, after fifteen years, or

• (ii) any other purpose, after five years,

beginning with the earlier of the day on which regulation 28, 34 or 47, as applicable, first applies to the person, or

• (b) if earlier, with the day—

• (i) on which a person to whom regulation 47 applies is given a decision notice in respect of a decision under regulation 55(1)(b) or (c);

• (ii) before the day on which the person ceases to be authorised, under the law of the person’s home state, to carry on an activity which is regulated by the person’s home state regulator.

CHAPTER 7 — General provision

Directions

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The power to give directions under this Part 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.

Interpretation of Part 7

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For the purposes of this Part—

• “contract of insurance” has the same meaning as in article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

• “establishment” means a branch;

• “the FCA” means the Financial Conduct Authority;

• “home state regulator” has the meaning given by regulation 21;

• “payment service” has the same meaning as in regulation 2 of the Payment Services Regulations 2017;

• “the PRA” means the Prudential Regulation Authority;

• “pre-existing contract”—in the case of a person who satisfies the conditions in regulation 49, means a contract entered into before IP completion day;in the case of a person who satisfies the conditions in regulation 50 or 51, has the same meaning, in respect of the person, as in Part 6;

• “regulated activity” has the same meaning as in section 22 of the 2000 Act;

• “regulator” means the FCA or the PRA;

• “relevant day” means—in the case of a person who satisfies the conditions in regulation 49, IP completion day;in the case of a person who satisfies the conditions in regulation 50, the earlier of—the day on which regulation 28 first applies to the person, orwhere applicable, the day on which regulation 47 first applies to the person;in the case of a person who satisfies the conditions in regulation 51, the earlier of—the day on which regulation 34 first applies to the person, orwhere applicable, the day on which regulation 47 first applies to the person.

PART 8 — Transitional provision: miscellaneous

Performance of regulated activities

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• (1) In respect of a person to whom regulation 28 or 34 applies, Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) is modified as follows.

• (2) That Part has effect as if, after section 59 (approval for particular arrangements), there were inserted—

(59ZZA) (1) The appropriate regulator may by notice given to an authorised person treat as approved under section 59 a person who is the subject of an application under section 60. (2) The period during which a person may be so treated begins on such day as the notice may specify and ends— (a) after twelve months, or (b) if earlier— (i) if the application is granted, with the day before the day stated in the written notice (given in accordance with section 62(1)) or decision notice (given in accordance with section 62(3)) as that from which approval has effect; (ii) if the application is refused, with the day before the day stated in the decision notice (given in accordance with section 62(3)) as that on which the person is to cease to be treated as approved. (3) The period in subsection (2) is subject to— (a) the withdrawal of an approval under section 63; (b) the expiry of an approval under section 66(3)(ac). (4) Reference in an enactment to an approval given by the appropriate regulator under section 59 (however expressed) is to be read, unless the contrary intention appears, as including an approval a person is treated as having by virtue of this section.

• (3) Section 61 (controlled functions: determination of applications) has effect as if, for subsection (3A), there were substituted—

(3A) The “period for consideration” means the period of twelve months beginning with the date on which the regulator receives the application under section 60.

• (4) Section 62 (applications for approval: procedure and right to refer to Tribunal) has effect as if—

• (a) after subsection (1), there were inserted—

(1A) The notice must state the day from which the approval has effect.

• (b) after subsection (3), there were inserted—

(3A) The notice must state— (a) where the decision is to refuse the application, the day on which the person who is the subject of an application is to cease to be treated as approved in accordance with section 59ZZA; (b) where the decision is to grant the application subject to conditions or for a limited period (or both), the day from which the approval has effect.

• (5) Section 63 (withdrawal of approval) has effect as if, after subsection (4), there were inserted—

(4A) If a regulator decides to withdraw an approval that a person is treated as having by virtue of section 59ZZA, the decision notice must state the day on which that approval is to cease to have effect. (4B) For the purposes of subsection (4A), the day stated must be a day that falls before the end of the period of twelve months after the day on which that approval first has effect.

Financial Services Compensation Scheme: a person to whom regulation 28 or 34 applies

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• (1) In respect of a person to whom regulation 28 or 34 applies, Part 15 of the Financial Services and Markets Act 2000 (Financial Services Compensation Scheme) is modified as follows.

• (2) Section 213 (the compensation scheme) has effect as if—

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

(4A) The compensation scheme may not provide for the scheme manager to have the power to impose levies on a person who is not to be regarded as a relevant person by virtue of subsection (9A).

• (b) after subsection (9), there were inserted—

(9A) But a person to whom subsection (9B) applies and who, at that time— (a) has not established a branch in the United Kingdom, and (b) is treated as if— (i) the person has permission to carry on a regulated activity by virtue of regulation 28 of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018, or (ii) the person’s permission to carry on a regulated activity were varied in accordance with regulation 34 of those Regulations, is not to be regarded as a relevant person in relation to a regulated activity which the person has permission to carry on by virtue of regulation 28 or 34 of those Regulations. (9B) This subsection applies to a person who is, immediately before IP completion day — (a) a credit institution, (b) an insurance intermediary, (c) an investment firm, or (d) a mortgage intermediary, (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9C) For the purposes of subsection (9B)— - ... - ... - ... - ... - ... - “credit institution” means a credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 which is, immediately before IP completion day, authorised (within the meaning of Article 8 of Directive 2013/36/EU of the European Parliament and of the Council of 26th June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC) by its home state regulator; - ... - ... - “insurance intermediary” means an insurance intermediary or an ancillary insurance intermediary as defined in Article 2.1(3) and (4) of Directive 2016/97/EC of the European Parliament and of the Council of 20th January 2016 on insurance distribution (recast) which is, immediately before IP completion day, registered (under Article 3 of that Directive) by its home state regulator; - “investment firm” means an investment firm as defined in Article 4.1(1) of Directive 2014/65/EU of the European Parliament and of the Council of 15th May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU which is, immediately before IP completion day, authorised (within the meaning of Article 5 of that Directive) by its home state regulator; - ... - “mortgage intermediary” means—a credit intermediary as defined in Article 4(5) of Directive 2014/17/EU of the European Parliament and of the Council of 4th February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010, ora person providing advisory services as defined in Article 4(21) of that Directive,which is, immediately before IP completion day, admitted (in accordance with Article 29.1 of that Directive) by its home state regulator; - ... - ...

• (3) Section 224 (scheme manager’s power to inspect documents held by Official Receiver, etc.) has effect as if, after subsection (3), there were inserted—

(3A) But a person who is not to be regarded as a relevant person for the purposes of section 213, by virtue of subsection (9A) of that section, is not to be regarded as a relevant person for the purposes of this section.

Financial Services Compensation Scheme: a person to whom regulation 47 applies

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• (1) A person to whom regulation 47 applies and who is—

• (a) carrying out a contract of insurance,

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

shall be treated as if the person were an authorised person for the purposes of section 213 (the compensation scheme) of the 2000 Act.

• (2) For the purposes of paragraph (1)—

• ...

• ...

• “contract of insurance” has the same meaning as in article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

• ...

• ...

• ...

Insurance and reinsurance - modification of Part 4 of the Solvency 2 Regulations 2015

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• (1) In respect of a person to whom regulation 28 or 34 applies, Part 4 of the Solvency 2 Regulations 2015 (approvals) is modified as follows.

• (2) That Part has effect as if, after Chapter 2, there were inserted—

(54A) (1) A person to whom regulation 28 or 34 of the EEA Passport Rights (Amendment etc., and Transitional Provisions) Regulations 2018 (“the 2018 Regulations”) applies is to be treated as if the PRA has granted to the person an approval, determined in accordance with paragraphs (2) and (3), with respect to the person carrying on business in the UK through a branch. (2) In respect of a person— (a) who, immediately before the day on which regulation 28 or 34 of the 2018 Regulations first applies to the person, is approved by a supervisory authority of an EEA State— (i) in respect of the matter mentioned in the first column of the following table and (ii) under the provision of the Solvency 2 Directive mentioned in the corresponding entry in the second column of the table, and (b) whose approval is applicable to the person’s permanent presence in the UK, the approval a person is treated as having is the approval mentioned in the corresponding entry in the third column of the table.

(3) In respect of a person— (a) who, immediately before the day on which regulation 28 or 34 of the 2018 Regulations first applies to the person, is applying a volatility adjustment to the relevant risk-free interest rate term structure in order to calculate the best estimate referred to in Article 77(2) of the Solvency 2 Directive on a date specified by the PRA, and (b) whose approval by a supervisory authority of an EEA State is not required, the approval a person is treated as having is an approval under regulation 43.

• (3) Regulation 55 (decisions: written notices) has effect as if, after paragraph (2), there were inserted—

(2A) If the PRA revokes an approval, the written notice must, where applicable, state the day on which regulation 54A ceases to apply.

PART 9 — Power to amend the duration of transitional and saving provision under Parts 6 and 7

Power to amend the duration of transitional and saving provision

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• (1) The Treasury may by regulations made by statutory instrument amend—

• (a) regulation 41(1)(a)(i) or (ii) to extend the period during which regulation 28 or 34 is to apply, or

• (b) regulation 67(a)(i) or (ii) to extend the period during which regulation 47 is to apply,

if the Treasury consider it necessary to do so.

• (2) The Treasury may only make regulations under paragraph (1) if, no later than six months before the end of the period to be extended, the Financial Conduct Authority and the Prudential Regulation Authority have submitted to the Treasury a joint assessment as to the effect of extending, and not extending, the period on—

• (a) persons (in general) to whom regulation 28, 34 or 47 applies,

• (b) the UK financial system (within the meaning of section 1I of the 2000 Act), and

• (c) the ability of the Financial Conduct Authority and Prudential Regulation Authority to discharge their functions in a way that advances their objectives under Part 1A of the 2000 Act.

• (3) Regulations under paragraph (1) may not extend the period for the time being by more than 5 years.

• (4) The power to make regulations under paragraph (1) may be exercised—

• (a) so as to make different provision for different cases or purposes;

• (b) in relation to all or only some of the cases or purposes for which it may be exercised.

• (5) A statutory instrument which contains regulations under paragraph (1) is subject to annulment in pursuance of a resolution of either House of Parliament.

Steps to be taken before IP completion day: application or notification

Information to be supplied to a party to a contract with a person to whom regulation 47 applies

54A

• (1) A person to whom regulation 47 applies must notify each party to a pre-existing contract with the person that the person is—

• (a) an exempt person for the purposes of section 19(1)(b) of the 2000 Act, and

• (b) not regulated by the FCA or the PRA.

• (2) The notification must be made as soon as reasonably practicable following the day on which regulation 47 first applies to the person.

• (3) A person to whom regulation 47 applies must notify each party to a pre-existing contract with the person if there is a material change, on or after IP completion day, in respect of—

• (a) the protection afforded to assets held by the person in relation to the performance of the contract,

• (b) the mechanisms for resolving disputes in connection with the contract, or

• (c) the schemes available for compensation in relation to the contract.

• (4) The relevant regulator may issue guidance in respect of compliance with an obligation under this regulation.

• (5) For the purposes of paragraph (4), reference to the relevant regulator is a reference to—

• (a) the FCA;

• (b) in a case where the regulated activities to which regulation 47 has effect consist of or include a PRA-regulated activity (within the meaning of section 22A of the 2000 Act), the PRA.