Britain’s financial watchdog has taken a hardline approach to four European firms operating in the country under the temporary permissions regime (TPR).
The Financial Conduct Authority (FCA) has cancelled the temporary permissions of Arumpro Capital Limited, Esfera Capital, INZMO Europe GmbH, and Evest Limited. The latter is a CySEC-regulated brokerage firm, which was also seeking a license from the South Africa’s Financial Sector Conduct Authority (FSCA).
“Firms that have had their permissions cancelled can no longer conduct regulated business in the UK and will be committing a criminal offence if they do so,” the FCA said.
Explaining the rationale behind the move, the watchdog said these firms, despite multiple opportunities, did not respond to mandatory information requests. The FCA further warned other European companies that if they wish to remain in that they need to meet its standards.
“The UK is open for business, but not to firms who do not meet our regulatory expectations. We expect firms operating under the regime to be responsive to our requests for information, and that are coherent in their business planning. We will continue to act against firms that fail to meet our standards,” said Emily Shepperd, Executive Director of Authorisations at the FCA.
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FCA tightens grip
The Temporary Permissions Regime (TPR) was designed to mitigate potential risks of a ‘no-deal Brexit,’ where the passporting regime falls away abruptly. This scenario meant that there will not be a transition period in place when the UK withdraws from the EU, i.e., the UK becomes a ‘third-country’ in relation to the bloc.
As such, the regime ensures that European firms operating in the UK via a passport when the Brexit transition period ended could continue operating temporarily while they seek full authorisation in the UK. This permission, however, can be cancelled if firms miss their “landing slot” or have no intention in applying for full authorisation.
The TPR came into force on exit day for a maximum of three years within which the EEA financial services firms operating in the UK, and fund managers marketing passported funds, will be required to obtain authorization in the UK.
EEA firms that currently access the UK market through passporting licenses can do so by notifying the FCA of their wish to enter the temporary regime to continue their regulated activities within the scope of their current permissions. After that, they will need then apply for a full authorization during the TPR period.
