Given the latest political developments in the UK, a hard Brexit is becoming a more tangible reality. Belgian financial institutions doing business in the UK will be severely affected in a no-deal scenario. They should therefore ensure that they join the permission regime discussed below as soon as possible if they wish to continue doing business in the UK from 29 March 2019. Failure to do so will mean institutions following a burdensome application process with the UK regulator.
In fact, to help EEA financial institutions deal with a no-deal scenario, the UK government announced last year that it would introduce a temporary permission regime (“TPR”) in the UK, entering into force if a withdrawal agreement containing a transition period is not agreed between the UK and the EU.
With the TPR, Belgian financial services businesses that currently perform regulated activities in the UK using EU passporting rights will be able to continue those activities. They will be given permission to carry on the same range of activities in the UK post-Brexit as they did immediately prior to Brexit. An EEA firm will be eligible for temporary permission for a limited period of time (up to a maximum of three years) while it seeks permanent authorisation or recognition from the UK regulators. Firms whose applications are successful will immediately become fully UK authorised and will leave the TPR.
To be eligible to join the TPR, firms must notify the UK regulators that they want to benefit from the TPR. The closing date for such notifications is 28 March 2019, after which it will not be possible to join the TPR without having submitted a notification.