SCHEDULES
C5SCHEDULE 3EEA Passport Rights
Part III Exercise of Passport Rights by UK Firms
Establishment
I1C119
1
A UK firm may not exercise an EEA right to establish a branch unless three conditions are satisfied.
C22
The first is that the firm has given the Authority, in the specified way, notice of its intention to establish a branch (“a notice of intention”) which—
a
identifies the activities which it seeks to carry on through the branch; and
b
includes such other information as may be specified.
3
The activities identified in a notice of intention may include activities which are not regulated activities.
C24
The second is that the Authority has given notice in specified terms (“a consent notice”) to the host state regulator.
5
The third is that—
a
the host state regulator has notified the firm (or, where the EEA right in question derives from any of the insurance directives, the Authority) of the applicable provisions; or
b
two months have elapsed beginning with the date on which the Authority gave the consent notice.
C26
If the firm’s EEA right derives from the investment services directive or the F14banking consolidation directive and the first condition is satisfied, the Authority must give a consent notice to the host state regulator unless it has reason to doubt the adequacy of the firm’s resources or its administrative structure.
C27
If the firm’s EEA right derives from any of the insurance directives and the first condition is satisfied, the Authority must give a consent notice unless it has reason—
a
to doubt the adequacy of the firm’s resources or its administrative structure, or
b
to question the reputation, qualifications or experience of the directors or managers of the firm or the person proposed as the branch’s authorised agent for the purposes of those directives,
in relation to the business to be conducted through the proposed branch.
8
If the Authority proposes to refuse to give a consent notice it must give the firm concerned a warning notice.
9
If the firm’s EEA right derives from any of the insurance directives and the host state regulator has notified it of the applicable provisions, the Authority must inform the firm of those provisions.
10
Rules may specify the procedure to be followed by the Authority in exercising its functions under this paragraph.
11
If the Authority gives a consent notice it must give written notice that it has done so to the firm concerned.
12
If the Authority decides to refuse to give a consent notice—
a
it must, within three months beginning with the date when it received the notice of intention, give the person who gave that notice a decision notice to that effect; and
b
that person may refer the matter to the Tribunal.
13
In this paragraph, “applicable provisions” means the host state rules with which the firm will be required to comply when conducting business through the proposed branch in the EEA State concerned.
14
In sub-paragraph (13), “host state rules” means rules—
a
made in accordance with the relevant single market directive; and
b
which are the responsibility of the EEA State concerned (both as to implementation and as to supervision of compliance) in accordance with that directive.
15
“Specified” means specified in rules.
Services
I220
C3C41
A UK firm may not exercise an EEA right to provide services unless the firm has given the Authority, in the specified way, notice of its intention to provide services (“a notice of intention”) which—
a
identifies the activities which it seeks to carry out by way of provision of services; and
b
includes such other information as may be specified.
2
The activities identified in a notice of intention may include activities which are not regulated activities.
3
If the firm’s EEA right derives from F1the banking consolidation directive, the investment services directive or the UCITS directive, the Authority must, within one month of receiving a notice of intention, send a copy of it to the host state regulator F2with such other information as may be specified.
F33A
If the firm’s EEA right derives from any of the insurance directives, the Authority must, within one month of receiving the notice of intention—
C4a
give notice in specified terms (“a consent notice”) to the host state regulator; or
b
give written notice to the firm of—
i
its refusal to give a consent notice; and
ii
its reasons for that refusal.
4
When the Authority sends the copy under sub-paragraph (3) F4or gives a consent notice, it must give written notice to the firm concerned.
F54A
If the firm is given notice under sub-paragraph (3A)(b), it may refer the matter to the Tribunal.
4B
If the firm’s EEA right derives from any of the insurance directives, it must not provide the services to which its notice of intention relates until it has received written notice under sub-paragraph (4).
4C
Rules may specify the procedure to be followed by the Authority under this paragraph.
F65
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6
“Specified” means specified in rules.
F720ZAF7Information for host state regulator
1
The Authority must keep a record of the confirmation and other information provided to the host state regulator under paragraph 19(4) or paragraph 20(3C) in relation to a UK firm which is a management company.
2
The Authority must inform the host state regulator whenever there is a change in the confirmation or other information referred to in sub-paragraph (1).
Tied agents
F1220A
1
If a UK investment firm is seeking to use a tied agent established in an EEA State (other than the United Kingdom) in connection with the exercise of an EEA right deriving from the markets in financial instruments directive, this Part of this Schedule applies as if the firm were seeking to establish a branch in that State.
2
But if—
a
a UK investment firm has already established a branch in an EEA State other than the United Kingdom in accordance with paragraph 19; and
b
the EEA right which it is exercising derives from the markets in financial instruments directive,
paragraph 19 does not apply in respect of its use of the tied agent in question.
F820BF8Notice of intention to market
1
The operator of a UCITS established in the United Kingdom may not exercise an EEA right to market the units of that UCITS in the territory of another EEA State unless the operator has given the Authority, in the specified way, notice of its intention to market the units (“notice of intention”) which contains, and is accompanied by, such information as may be specified in rules, or in regulations made by the European Commission under the UCITS directive.
2
The Authority must ensure that the information referred to in sub-paragraph (1) may be transmitted to it electronically.
3
The Authority must verify whether the information submitted with the notice of intention is complete and, within 10 days of the date on which the Authority received the complete information required, send to the host state regulator—
a
a copy of the notice of intention;
b
the accompanying information; and
c
confirmation that the operator and the UCITS fulfil the conditions imposed by the UCITS directive.
4
The Authority must ensure that the host state regulator has electronic access to the information and documents referred to in sub-paragraph (3).
5
The Authority must notify the operator immediately that the information referred to in sub-paragraph (3) has been sent to the competent authorities of the host state regulator.
6
The operator may market the units of the UCITS in the territory of the host state regulator from the moment it receives the notification referred to in sub-paragraph (5).
7
In this paragraph—
“operator” has the same meaning as in section 237 of this Act;
“specified” means specified in rules.
Offence relating to exercise of passport rights
I321
1
If a UK firm which is not an authorised person contravenes the prohibition imposed by—
a
sub-paragraph (1) of paragraph 19, or
b
sub-paragraph (1) or F15(4B) of paragraph 20,
it is guilty of an offence.
2
A firm guilty of an offence under sub-paragraph (1) is liable—
a
on summary conviction, to a fine not exceeding the statutory maximum; or
b
on conviction on indictment, to a fine.
3
In proceedings for an offence under sub-paragraph (1), it is a defence for the firm to show that it took all reasonable precautions and exercised all due diligence to avoid committing the offence.
Continuing regulation of UK firms
I422
1
Regulations may make such provision as the Treasury consider appropriate in relation to a UK firm’s exercise of EEA rights, and may in particular provide for the application (with or without modification) of any provision of, or made under, this Act in relation to an activity of a UK firm.
2
Regulations may—
a
make provision as to any change (or proposed change) of a prescribed kind relating to a UK firm or to an activity that it carries on and as to the procedure to be followed in relation to such cases;
b
make provision with respect to the consequences of the firm’s failure to comply with a provision of the regulations.
3
Where a provision of the kind mentioned in sub-paragraph (2) requires the Authority’s consent to a change (or proposed change)—
a
consent may be refused only on prescribed grounds; and
b
if the Authority decides to refuse consent, the firm concerned may refer the matter to the Tribunal.
I523
1
Sub-paragraph (2) applies if a UK firm—
a
has a Part IV permission; and
b
is exercising an EEA right to carry on any Consumer Credit Act business in an EEA State other than the United Kingdom.
2
The Authority may exercise its power under section 45 in respect of the firm if F9the Office of Fair Trading has informed the Authority that—
a
the firm,
b
any of the firm’s employees, agents or associates (whether past or present), or
c
if the firm is a body corporate, a controller of the firm or an associate of such a controller,
has done any of the things specified in paragraphs (a) to (d) of section 25(2) of the M1Consumer Credit Act 1974.
3
“Associate”, “Consumer Credit Act business” and “controller” have the same meaning as in section 203.
I624
1
Sub-paragraph (2) applies if a UK firm—
a
is not required to have a Part IV permission in relation to the business which it is carrying on; and
b
is exercising the right conferred by F10Article 19 of the banking consolidation directive to carry on that business in an EEA State other than the United Kingdom.
2
If requested to do so by the host state regulator in the EEA State in which the UK firm’s business is being carried on, the Authority may impose any requirement in relation to the firm which it could impose if—
a
the firm had a Part IV permission in relation to the business which it is carrying on; and
b
the Authority was entitled to exercise its power under that Part to vary that permission.
Information to be included in the public record
F1325
The Authority must include in the record that it maintains under section 347 in relation to any UK firm whose EEA right derives from the insurance mediation directive information as to each EEA State in which the UK firm, in accordance with such a right—
a
has established a branch; or
b
is providing services.
F1126F11UK management companies: delegation of functions
Where a UK firm which is a management company and is providing services in the exercise of an EEA right to an EEAUCITS informs the Authority that it has delegated one or more of its functions to a third party, the Authority must transmit that information to the home state regulator of the EEAUCITS without delay.
27UK management companies: withdrawal of authorisation
Where a UK firm which is a management company has exercised an EEA right deriving from the UCITS directive to establish a branch or to provide services in another EEA State, the Authority must consult the home state regulator of any UCITS managed by that management company before taking a decision to withdraw the authorisation of the management company under section 33.
28Management companies: request for information
1
Where a UK firm has applied to manage a UCITS which is established in another EEA State, the home state regulator of the UCITS may—
a
request further information from the Authority regarding the documents referred to in Article 20.1 of the UCITS directive, and
b
ask the Authority whether the type of UCITS for which the UK firm has applied to provide its services falls within the scope of the authorisation of the UK firm.
2
The Authority must respond to a request under sub-paragraph (1)(a) or (b) within 10 working days of the date on which the request was received.
Sch. 3 extended (with modifications) (1.12.2001) by S.I. 2001/2636, arts. 1(2)(b), 25-27; S.I. 2001/3538, art. 2(1)
Sch. 3 extended (with modifications) (Gibraltar) (5.10.2001 for specified purposes, 1.12.2001 in so far as not already in force) by S.I. 2001/3084, arts. 1(1), 2-4 (as amended (16.6.2014) by The Alternative Investment Fund Managers Order 2014 (S.I. 2014/1292), arts. 1(2), 3 (which amending S.I. is itself amended by S.I. 2014/1313, arts. 1, 2(a)); and as amended (31.12.2020) by S.I. 2019/589, regs. 1(3), 5-9 (with reg. 12) (as amended by S.I. 2020/1274, regs. 1, 2)); S.I. 2001/3538, art. 2(1)
Sch. 3 modified (1.12.2001) by S.I. 2001/3592, arts. 1(2), 114(3)(b), 128(3)(b) (with art. 23(2))