SUP 13.7 Changes to cross border services

Where a UK firm12 is exercising an EEA right under the UCITS Directive, MiFID,12 the MCD11 or AIFMD8 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), 12A(1)5 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 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 FCA15 and to the Host State regulator stating the details of the proposed change; or

   15
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 FCA15 and to the Host State regulator, stating the details of the change.2

   15

Standard forms are15 available from the FCA authorisations team 15(see SUP 13.12 (Sources of further information)) to give the notices to the FCA referred to in15 SUP 13.7.3 G (1) and SUP 13.7.3A G.5

5If a UK firm is providing cross border services in a particular EEA State in exercise of an EEA right deriving from MiFID, the UK firm must comply with the requirements of regulation 12A(2) before it makes a change to its programme of operations, including:

1. (1)

   changing the activities to be carried on in exercise that EEA right;

2. (2)

   using, for the first time, any tied agent to provide services in the territory of that EEA State; or

3. (3)

   ceasing to use any tied agent to provide services in the territory of that EEA State.

5The requirements of regulation 12A(2) are that:

1. (1)

   the UK firm has given notice to the appropriate UK regulator15 stating the details of the proposed change; and

   15
2. (2)

   the period of one month beginning with the day on which the UK firm gave the notice mentioned in (1) has elapsed.

5For further details on giving the notices to the appropriate UK regulator, as described in SUP 13.7.3 G (1), SUP 13.7.3AG and SUP 13.7.3BG12, UK firms may wish to use the standard electronic15 form available from the FCA and PRA authorisation teams 15(see SUP 13.12 (Sources of further information)).

A UK firm providing cross border services under the CRD7 or Insurance Mediation Directive is not required to supply a change to the details of cross border services notice5.3

15Where the PRA is the appropriate UK regulator, it will consult the FCA before deciding whether to give consent to a change (or proposed change) and where the FCA is the appropriate UK regulator, it will consult the PRA before deciding whether to give consent in relation to a UK firm whose immediate group includes a PRA-authorised person.

If a UK firm has exercised an EEA right under AIFMD to provide cross-border services to manage an AIF, regulation 17A(2) states that the UK firm must not make a material change to:

1. (1)

   the programme of operations, or the EEA activities, to be carried out in exercise of that right; or

2. (2)

   the EEA States in which it manages AIFs; or

3. (3)

   the identity of the AIFs it manages in those EEA States;

unless the UK firmcomplies with the relevant requirements in regulation 17A(4) for a planned change or regulation 17A(5) for an unplanned change (see SUP 13.6.9CG (2) and SUP 13.6.9CG (3)).

9If a UK firm has exercised an EEA right deriving from AIFMD to provide cross-border services to market an AIF, regulation 17A(3) states that it must not make a material change to any of the following:

1. (1)

   the programme of operations identifying the AIF the AIFM intends to market and information on where the AIF is established;

2. (2)

   the AIF rules or instruments of incorporation;

3. (3)

   the depositary of the AIF;

4. (4)

   the description of, or information on, the AIF available to investors;

5. (5)

   if the AIF is a feeder AIF, the jurisdiction where the master AIF is established;

6. (6)

   any additional information referred to in FUND 3.2.2 R (Prior disclosure of information to investors), for each AIF the AIFM intends to market;

7. (7)

   the EEA States in which the AIFM intends to market the units or shares of the AIF to an investor that is a professional client; and

8. (8)

   information about arrangements made for the marketing of the AIF and, where relevant, arrangements to prevent the AIF from being marketed to an investor that is a retail client, including where the AIFM relies on the activities of independent entities to provide investment services for the AIF;

unless the UK firm complies with regulation 17A(4) for a planned change or regulation 17A(5) for an unplanned change (see SUP 13.6.9CG (2) and SUP 13.6.9CG (3)).

1. (1)

   11A UK firm which has exercised an EEA right deriving from the MCD to provide a cross border service, must not make any material changes to the service unless it has complied with the requirements in regulation 17(B)(2).

2. (2)

   The requirements in regulation 17(B)(2) are that;

   1. (a)

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

   2. (b)

      the period of one month has elapsed, beginning with the day on which the UK firm gave notice.

3. (3)

   Paragraph (1) does not apply to a changes occasioned by circumstances beyond the control of the UK firm.