Financial services was not part of the Trade Agreement signed between the UK and EU that came into force on 1st January 2021.
This means that from January financial services firms were not allowed to passport services from the UK to the EU or vice versa. Many regulators are offering a Temporary Permissions Regime where fully established regulatory operations will be set up in various jurisdictions, that said many smaller financial advisers will not be in a position to do this as it is simply not cost effective if you have say 12 clients in Spain, 3 in Ireland, 2 in Germany, 8 in France etc.
We all wait for the Memorandums of Understanding (MoU), agreed in February/March 2021 to develop.
An MoU is not a signed agreement. It is simply an understanding that both sides need to talk about various issues and come to agreements on how things should work to ensure continuity for clients and consumers without detriment and improved financial protection.
There are 5 MoUs that have been established
The 1st Purpose and General Principle of the MOU: “This multilateral MoU is a statement of intent to consult, cooperate and exchange information in connection with the discharge of the responsibilities entrusted to the Authorities under the Laws and Regulations, in a manner consistent with, and permitted by, the laws and requirements that govern the Authorities”. In short, all sides have only agreed to have discussions to try and reach agreements.
The Way Forwards: Multilateral MoU 1, Article 16. Delegation of Tasks:
“In certain circumstances, an Authority may delegate one or more of its tasks to a Delegated Authority, subject to the agreement of the latter. Delegation of tasks will not affect the responsibility of the delegating Authority including in applying the provisions of Article 14 on confidentiality and onward sharing of information.” We see this as the way forwards. If the French regulator wishes to delegate responsibilities of financial advice to the UK Financial Conduct Authority for a French resident (UK or EU National) then delegation of those regulatory tasks to UK FCA would appear to be the most obvious route. We do hope so as it is crazy that a French resident can do virtually nothing with their pensions or investments in the UK at present unless it is already in the contract terms provided these were signed on or before 31st December 2020.
What EU regulators are saying:
Links to EU Regulators position from the FCA: https://www.fca.org.uk/brexit/information-eea-regulators
We have been to many EU regulator Brexit pages and most EU regulators appear to be adopting the inteepretation that we have made below with some also suggesting a run off period of 15 years where all business should be concluded by then. We ask “but what about a pension that a client may not be able to access for another 20 or 30 years?”. We have posed this question to a number of EU regulators alongside a number of other scenarios and are awaiting responses.
Our Current Interpretation:
If you have UK pensions or investments and you are resident in the EU:
This is clearly a mess and to the detriment of consumers. We look forward, with hope, to a full and all encompassing financial services trade agreement. If nothing else, to just to be able to help EU residents with full options on their existing UK pensions and investments.