Expat Update for UK Pension and Investment Advice After Brexit

Published / Last Updated on 01/09/2022

The Brexit Trade Agreement did not include financial services passporting although it was supposed to.   Negotiations are ongoing regarding ‘Equivalency’ on financial services with 5 X Memorandums of Understanding (MOUs) agreed in January 2021.  MOUs are essentially ‘agreements to reach an agreement’ only. 

One of the MOUs between UK and EU regulators confirms that they are working towards ‘delegated authority’ where if an EU resident has a UK pension/investment, then respective EU advisers are not authorised to advice on unless they have set up a UK branch with FCA authorisation in UK and therefore advice will need to be delivered by a UK authorised IFA.  This is where EU regulators delegate their authority to the UK FCA to oversee and regulate the advice on a UK pension/investment.

Given the ‘state of flux’ we are all in as negotiations continue, technically, we are no longer authorised in EU (for the time being).  Fish, wine, cheese, and cars are no problem, but finance is a ‘no’ at present.  We do not ‘solicit’ or promote services to EU residents, but we will accept ‘Reverse Solicitation’ i.e.  you approach us to help you with existing UK taxes, investments, or pensions only.  We will not advise on or arrange 'new money' investments for you, but we will advise on existing UK arrangements that are then actioned/transferred/amended within the UK.  Given this, and until an agreement is reached on Equivalency and Delegated Authority, we will offer the technical advice from the UK on your UK pensions, investments, and tax with our requirement that you also take advice locally in the EU to oversee any actions at 'your end' to ensure tax compliance and reporting requirements with EU authorities.  You should also be aware that there are even greater restrictions for residents of France.  No Fishing Rights = No Finance in France, although they are softening their position to that of other EU authorities where things appear to continue as they were with EU regulators happy that the FCA oversees any UK advice on existing UK products and services.

FCA Permission but We Must Check with EU regulators

Please note we have written confirmation from both our professional insurers and the FCA that all advice that we offer must be offered and delivered from the UK, under FCA regulatory rules and FCA protection and that we are permitted to advise people anywhere in the World according to the UK regulator, but we must check if there are any regulatory restrictions where a client lives.  In short, we offer advice as if you were resident in the UK and provided that you and your EU adviser check with your EU regulator that they are happy for us to continue UK advice for you in tandem with your local adviser ensuring tax compliance and reporting requirements with EU authorities.  We will require this in writing from your EU regulator/your EU adviser.

Update – EU Regulators Now Replying

We are finally starting to receive confirmation from some EU regulators that any advice to a resident in their country in connection with a UK pension or investment is completely outside their jurisdiction and is entirely within the remit of the Financial Conduct Authority in the UK.  We have a ‘green list’ now for several EU nations and still growing.  There are still many other EU regulators that we are waiting for a reply to with France being the most difficult and on our ‘red list’..

France:  To our knowledge, there are no UK advisers or UK providers currently able to accept new applications from French residents.  If you have a UK pension and you are in France, you are currently only allowed to amend existing contracts provided the contract was in place before the UK’s departure from the EU and provided the option or action that you wish to take is already included in your contract.  For example, if your pension scheme offers annuity and drawdown options, then you can still arrange your annuity or flexible drawdown with your pension company.  If your UK pension does not offer flexible drawdown and you need to transfer your UK pension to a new UK flexible drawdown pension provider, currently French regulations will not allow this as drawdown is not in your existing pension plans contract terms.

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