SUP 13.4 Providing cross border services into another EEA State

Guidance on where a cross border service is provided is given in SUP App 36.41

A UK firm, other than a UK pure reinsurer or an AIFM exercising an EEA right to market an AIF under AIFMD13,9 cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, AIFMD, MiFID or the UCITS Directive,13 paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the Act).The conditions are that:

1. (1)

   the UK firm has given the appropriate UK regulator,20 in the way specified by appropriate UK regulator's20 rules (see SUP 13.5.2 R), notice of its intention to provide cross border services (known as a notice of intention8) which:

   20208
   1. (a)

      identifies the activities which it seeks to carry on by way of provision of cross border services; and

   2. (b)

      includes such other information as may be specified by the appropriate UK regulator20 (see SUP 13.5.2 R); and

      20
2. (2)

   if the UK firm is passporting under the Insurance Directives, the firm has received written notice from the PRA20 as described in SUP 13.4.6 G; or4

   20
3. (3)

   if the UK firm is passporting under the Insurance Mediation Directive and the EEA State in which the UK firm is seeking to provide services has notified the European Commission of its wish to be informed of the intention of persons to provide cross border services in its territory in accordance with article 6(2) of that directive, one month has elapsed beginning with the date on which the UK firm received written notice from the appropriate UK regulator20 as described in SUP 13.4.5 G (paragraph 20 (3B)(c) of Schedule 3 to the Act)4; or13

   20
4. (4)

   13if the UK firm is passporting under AIFMD, the firm

   has received written notice from the FCA as described in SUP 13.4.4-AG (1)(c).

4An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may provide cross border services in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention8 in SUP 13.4.2 G (1) should be given to the appropriate UK regulator20 by the firm on behalf of the appointed representative5.

4An exempt professional firm which is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FCA20 under article 93 of the Regulated Activities Order may provide cross border services in another EEA State under the Insurance Mediation Directive (see PROF 7.2).

8A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to provide cross border services in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.

8A MiFID investment firm that wishes to obtain a passport for the activity of operating an MTF should follow the procedures described in this chapter. A UK market operator that operates a recognised investment exchange, a recognised auction platform (pursuant to the RAP regulations, the definition of regulated market in the Act is read for these purposes as including a recognised auction platform)11 or an MTF and wishes to provide cross border services into another EEA State should follow the procedure described in REC 4.2B.

14A UK firm that is an AIFM may exercise an EEA right to market a UK AIF or EEA AIF managed by it under AIFMD when the following conditions are satisfied:

1. (1)

   the UK firm has given the FCA a notice of intentionSUP 13.5.2 R; and

2. (2)

   the FCA has sent a copy of the notice of intention to the Host State regulator where the AIF will be marketed and has given the UK firm written notice that it has done so.

1. (1)

   If8 the UK firm's EEA right derives from MiFID8, theCRD12 or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the appropriate UK regulator20 to send a copy of the notice of intention8 to the Host State Regulator within one month8 of receipt.8A UK firm passporting under the CRD10 may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).8

   8812208881012
2. (2)
   1. (a)

      If8 the UK firm's EEA right derives from theInsurance Directives, paragraph 20(3A) of Part III of Schedule 3 to the Act requires the PRA20, within one month8 of receiving the notice of intention8, to:

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      1. (i)

         give notice in a specified form (known as a consent notice) to the Host State regulator; or

      2. (ii)

         give written notice to the UK firm of its refusal to give a consent notice and the reasons for that refusal.

   2. (b)

      The issue or refusal of a consent notice under paragraph 20(3A) of Part III of Schedule 3 to the Act is the consequence of a regulatory decision, and this consent notice (unlike the consent notice for establishment of a branch) is not a statutory notice as set out in section 395 of the Act. A UK firm that receives notice that the PRA20 refuses to give a consent notice may refer the matter to the Tribunal under paragraph 20(4A) of Part III of Schedule 3 to the Act.8

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   3. (c)

      If the PRA20 has required of a UK firm a financial recovery plan of the kind mentioned in paragraph 1 of article 38 of the Consolidated Life Directive or paragraph 1 of article 20a of the First Non-Life Directive, the PRA20 will not give a consent notice for so long as it considers that policyholders' rights are threatened within the meaning of those provisions.8

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3. (2A) 8
   1. (a)

      If the UK firm's EEA right derives from the Insurance Mediation Directive, and the EEA State in which the UK firm is seeking to provide services has notified the European Commission of its wish to be informed of the intention of persons to provide cross border services in its territory in accordance with article 6(2) of that directive, paragraph 20(3B)(a) of Part III of Schedule 3 to the Act requires the appropriate UK regulator20 to send a copy of the notice of intention to the Host State regulator within one month of receipt. Otherwise, the UK firm may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).8

      20
   2. (b)

      The list of the EEA States that have notified the European Commission of their wish to be informed in accordance with article 6(2) of the Insurance Mediation Directive is published on the FCA's20 website at www.fca.org.uk20.8

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4. (2B)

   Where a consent notice is given under the UCITS Directive, the FCA20 will at the same time:10

   20
   1. (a)

      communicate to the Host State regulator details of the compensation scheme intended to protect investors; and10

   2. (b)

      provide to the Host State regulator:10

      1. (i)

         confirmation that the firm has been authorised as a management company under the provisions of the UCITS Directive;10

      2. (ii)

         a description of the scope of the firm's authorisation; and

      3. (iii)

         details of any restriction on the types of EEA UCITS scheme that the firm is authorised to manage.

1. (1)

   14If the UK firm's EEA right derives from AIFMD (other than the EEA right to market an AIF (referred to in (3)) and the condition in (2) is met, paragraph 20(3D) of Part III of Schedule 3 to the Act requires the FCA to:

   1. (a)

      send a copy of the notice of intention to the Host State regulator within one month of receipt;

   2. (b)

      include confirmation that the UK firm has been authorised by the FCA under AIFMD; and

   3. (c)

      immediately inform the UK firm that the notice of intention and confirmation have been sent to the Host State regulator;

2. (2)

   The condition referred to in (1) is that the FCA is satisfied that the firm complies and will continue to comply with:

   1. (a)

      the provisions implementing AIFMD, and

   2. (b)

      any directly applicable EU regulation made under AIFMD.

3. (3)

   If the UK firm's EEA right derives from AIFMD and relates to the EEA right to market an AIF and both the conditions in (4) are met, paragraph 20C of Part III of Schedule 3 to the Act requires the FCA to:

   1. (a)

      send a copy of the notice of intention to the Host State regulator within 20 working days of receipt;

   2. (b)

      include confirmation that the UK firm has been authorised by the FCA to manage AIFs with a particular investment strategy; and

   3. (c)

      where the notice of intention relates to an EEA AIF, inform the competent authority of the EEA AIF that the UK firm may start marketing the AIF in the EEA Statescovered by the notice of intention.

4. (4)

   The conditions referred to in (3) are that:

   1. (a)

      the FCA is satisfied that the UK firm complies, and will continue to comply with, AIFMD and any directly applicable EU regulation made under AIFMD; and

   2. (b)

      where the AIF is a feeder AIF, its master AIF is a UK AIF or EEA AIF that is managed by a full-scope UK AIFM or a full-scope EEA AIFM.

5. (5)

   If the FCA refuses to send a copy of the notice of intention to the Host State regulator it must notify the AIFM in writing and include the reasons for such refusal. In such case, the AIFM may refer the matter to the Tribunal.

20Where the PRA is the appropriate UK regulator, it will consult the FCA before deciding whether to give a consent notice and where the FCA is the appropriate UK regulator, it will consult the PRA before deciding whether to give a consent notice in relation to a UK firm whose immediate group includes a PRA-authorised person.

When the appropriate UK regulator20 sends a copy of a notice of intention8, or if it gives a consent notice to the Host State regulator, it must inform the UK firm in writing that it has done so (paragraphs 20 (3B)(b), (3D)(a)(iii)13 and (4) and 20C(9)13 of Schedule 3 to the Act).4

10A UK firm seeking to provide collective portfolio management services in another EEA State under the freedom to provide cross border services, is advised that it will need to refer to the rules of the competent authority of the UCITS Home State implementing article 20 of the UCITS Directive which will require it to submit to that competent authority information relating to its depositary agreement and certain delegation arrangements.