These considerations are particularly important if you are using UK FS services to fund and support EU operations.
The UK-EU Trade and Cooperation Agreement (TCA) came into effect on 1 January 2021. The UK-EU TCA has resulted in banking, insurance and financial services providers facing restricted access to the EU. Financial services are a vital component of all businesses’ supply chain. Both financial institutions and corporates need to understand what the UK’s new trading relationship with the EU impacts how they access financial services in the UK and the EU, and if necessary, take action to avoid disruption.
The UK and EU concluded technical negotiations in March 2021 for a Memorandum of Understanding to support future regulatory dialogue. Whilst a positive step, the MOU does not change the state of play.
The guidance on this page represents the information currently available from government. The CBI will update this page as new information is released.
Key challenges for business
How will UK financial services firms access the EU?
UK financial services firms will no longer be able to provide the full range of regulated activities from the UK into the EU. In order to continue providing these services, the UK financial services firms have modified their business models: they have moved certain operations to existing presences within the EU; they have established a branch or a subsidiary within the EU or they may be relying on the individual European member states’ regimes to mitigate the impacts on their European customers.
How will EU financial services firms access the UK?
The UK has established the Temporary Permissions Regime (TPR) to enable EEA firms which currently operate within the UK (using the EEA passport) to continue to do so for a temporary period. This means that UK firms who use the services of EEA-based FS firms should have temporary cover to service UK clients providing that they have applied for and have been granted temporary permission by the UK regulators.
Alongside the TPR, the government introduced legislation to create the Financial Services Contracts Regime (FSCR). This will allow, for a limited period of time, EEA passporting for firms that do not enter the TPR to continue to service UK contracts entered into prior to the end of the transition period (or prior to when they enter FSCR) in order to conduct an orderly exit from the UK market once the transition period has ended.