SUP 13.7 Changes to cross border services

Where a UK firm is exercising an EEA right under the Investment Services Directive or Insurance Directives and is providing cross border services into another EEA State, any changes to the details of the services are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that contravention of the prohibition imposed by regulation 12(1) or 16(1) is an offence. It is a defence, however, for the UK firm to show that it took all reasonable precautions and exercised due diligence to avoid committing the offence.3

UK firms should also note that changes to the details of cross border services may lead to changes to the applicable provisions to which the UK firm is subject.

If a UK firm is passporting under the Investment Services Directive or the UCITS Directive, regulation 12(1) states that the UK firm must not make a change in its programme of operations, or the activities to be carried on under its EEA right, unless the relevant requirements in regulation 12(2) have been complied with. These requirements are:

1. (1)

   the UK firm has given a notice to the FSA and to the Host State regulator stating the details of the proposed change; or

2. (2)

   if the change arises as a result of circumstances beyond the UK firm's control, the UK firm has as soon as practicable (whether before or after the change) given a notice to the FSA and to the Host State regulator, stating the details of the change.2

If a UK firm has exercised an EEA right under the Insurance Directives and is providing cross border services into another EEA State, regulation 16(1) states that the UK firm must not make a change in the relevant details (as defined in regulation 17 - see also5 SUP 13 Annex 3) unless the relevant requirements in regulation 16(3) or, where the change arises from circumstances beyond the UK firm's control, regulation 16(4), have been complied with.

Regulation 16(3) provides that:

1. (1)

   the UK firm has given a notice to the FSA stating the details of the proposed change; and

2. (2)

   the FSA has given the Host State regulator a notice informing it of the details of the proposed change.

If the change arises from circumstances beyond the UK firm's control, the UK firm is required by regulation 16(4) to give a notice to the FSA stating the details of the change as soon as reasonably practicable (whether before or after the change). See also SUP 13.6.10 G(2), as relevant to cross border services.

5UK firms may wish to use the standard form available from the Passport Notifications Unit(see SUP 13.12 (Sources of further information)) to give the notices to the FSA as described in SUP 13.7.5 G (1) and SUP 13.7.6 G.

When the FSA receives a notice from a UK firm (see SUP 13.7.3 G (1), SUP 13.7.5 G (1) and SUP 13.7.6 G5), it is required by regulations 16(5) toeither refuse or consent to the change within one month5 of receipt.

If the FSA consents to the change it will:

1. (1)

   give a notice to the Host State regulator informing it of the details of the proposed change; and

2. (2)

   inform the UK firm that it has given the notice, stating the date on which it did so.

If the FSA refuses to consent to a change it will follow the decision making procedures set out in DEC 1 (Application, Purpose and Introduction). The FSA is required by regulation 16(7) to give notice of the refusal to the UK firm, stating its reasons and giving an indication of the UK firm's right to refer the matter to the Tribunal and the procedures that apply to such a reference. For details of procedures relating to references to the Tribunal see DEC 5 (References to the Tribunal, publication and service of notices).1

Where a UK firm with Part IV permission to carry on both long-term and general insurance business is passporting under the Insurance Directives and wishes to extend its general insurance business to include long term insurance business (or vice versa), it should complete a new notice of intention5 and not a change to details notice5.3

A UK firm providing cross border services under the Banking Consolidation Directive or Insurance Mediation Directive is not required to supply a change to the details of cross border services notice5.3