- Author : Novia Financial
- Date : 10 Nov 2020
Brexit and your clients – transition period ends 31 December 2020
Although the UK’s departure from the EU is set, political discussions are continuing to secure some form of deal. With the date getting closer amidst the pandemic, the uncertain outcome has lead the Government to warn businesses to be ready for either a ’new deal’, meaning a potential agreement on trade and future relations, or no deal.
Trading for your clients
The FCA’s temporary permissions regime (TPR) has enabled those offshore fund providers that currently passport into the UK to be able to continue trading activities in the UK. Novia and Copia have proactively checked those fund managers that would be expected to rely upon the temporary permission regime. The majority of assets have obtained permission and the remaining few still have time to register before 31 December. We are therefore confident that your UK clients will continue to be able to invest in the majority of existing assets and models. Any asset without permissions at the exit date will become suspended and we will update the information online accordingly.
With passporting potentially ceasing, if there is no deal or if the ‘new deal’ does not include this for financial services, you won’t be able to carry out regulated activities in the EEA territory without permission from the relevant country’s regulator. However, if your firm is purely conducting UK regulated activity for UK investment advice, we would not expect there to be impact to your permissions with providing ongoing services to clients resident in these countries. However, we would advise you to take action and check now that you will remain compliant ready for 1 January 2021.
We have very few investors who are resident in the EEA. However, for EEA resident investors, their UK bank may contact them directly about continuing their banking services outside of the UK. There does not appear to be a standard approach being taken by high street banks. There is speculation that some banks will be giving notice to non-UK residents that their UK bank account will close from 1 January 2021. Importantly, Novia’s current requirements will continue for investors to hold a UK bank account so they can withdraw their money in accordance with our terms and conditions. If any investor has their UK bank account closed, we will allow time for you to assist them in opening another UK bank account. We will not be insisting on closure or to transfer away from Novia; we will naturally continue to protect their investments and service their account. However, we will be unable to make payments to the client until we have received verification of their new UK bank account. If any of your clients might be affected we would encourage you to take action now to ensure that your client’s UK bank account will not be closed. This is especially important if your client is relying upon regular income payments.
With Brexit looming, firms are expected by the FCA to communicate to any clients who may be affected by the end of the transition period. Firms must pay attention to their clients’ information needs and communicate with them in a way which is clear, fair and not misleading (Principle 7) and the FCA Handbook rules.
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