On July 24, HM Treasury published its draft version of the European Economic Passports Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (draft Regulations).
The purpose of the draft Regulations is to remove references to the passporting framework set out in the Financial Services and Markets Act 2000 and in other UK legislation. The reason for this is if the United Kingdom leaves the European Union without a deal, there will be no agreed legal framework on which the passporting system can continue; therefore references in UK legislation to the passporting system would become “deficient” for the purposes of the European Union (Withdrawal) Act 2018 (for further details, see the Corporate & Financial Weekly Digest edition of June 29, 2018).
The draft Regulations also establish a temporary permissions regime (TPR) to enable EEA firms currently operating in the United Kingdom using a passport to continue their activities in the United Kingdom for a period after the date of the United Kingdom’s withdrawal from the European Union, March 29, 2019 (Exit Day). The draft Regulations envisage that the TPR will be in place for three years after Exit Day, with a power to extend if necessary.
HM Treasury intends to lay the draft Regulations before Parliament in fall 2018. The draft Regulations may be expanded to include provisions on other relevant issues. The majority of the provisions in the draft Regulations concerning the TPR will go into effect one day following the effectiveness of the draft Regulations. The remainder of the draft Regulations will go into effect on Exit Day. The UK Financial Conduct Authority and UK Prudential Regulation Authority also will update their rulebooks to reflect the changes introduced once the draft Regulations are made, and to address any deficiencies as a result of the United Kingdom leaving the European Union.
The draft Regulations are available here.
HM Treasury’s guidance on the draft Regulations is available here.