On 5 September 2018, a draft version of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 was laid before Parliament and published, together with a draft explanatory memorandum. HM Treasury had previously published a draft version of the Regulations in July 2018.
The draft Regulations will amend references to EEA passporting rights in domestic legislation, which will become deficient as a result of the UK’s exit from the EU. They will also implement a temporary permissions regime.
In the draft Regulations:
- Part 1 makes general provision as to citation, commencement and interpretation;
- Part 2 amends Part 3 of the Financial Services and Markets Act 2000 (FSMA) (authorisation and exemption) to repeal provisions dealing with the authorisation to carry on regulated activities, within the meaning of Part 2 of that Act, granted to EEA firms (Schedule 3 to that Act) and Treaty firms (Schedule 4 to that Act). The Schedule to the draft Regulations makes amendments consequential upon these repeals, as follows;
- Part 3 Chapter 1 provides modifications to Part 4A of FSMA for the purposes of the transitional provisions that follow;
- Part 3 Chapters 2 and 3 provide for a person authorised to carry on regulated activities before exit day by virtue of the provisions repealed by Part 2 to continue to do so, by treating the person as having the requisite permission under Part 4A of FSMA, pending the determination of an application for permission, or variation of a permission, under that Part;
- Part 3 Chapter 4 provides the procedure by which a person may be so treated;
- Part 3 Chapter 5 provides for the period during which a person may be so treated;
- Part 3 Chapter 6 provides saving provision;
- Part 3 Chapter 7 provides general and interpretative provision;
- Part 4 provides miscellaneous transitional provision in respect of other areas of financial services legislation which have a bearing on the provisions in Part 3;
- Part 5 provides a power for HM Treasury to amend certain time limits set by the modifications made by these Regulations.
Most of the provisions in the Regulations concerning the temporary permissions regime will come into force on the day after the day on which the Regulations are made. Regulations 2 (Repeal of passport rights, etc.), 3 (Consequential amendments), 4 (Saving provision: tax) and 24 (Financial Services Compensation Scheme - modifications of Part 15 of FSMA) will come into force on exit day.