SCHEDULES
C5SCHEDULE 3EEA Passport Rights
Part III Exercise of Passport Rights by UK Firms
Establishment
I1C119
1
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
F3Subject to sub-paragraph (5B), the activities identified in a notice of intention may include activities which are not regulated activities.
F44
The second is that—
a
the Authority has given notice in specified terms (“a consent notice”) to the host state regulator; and
b
where the firm is a management company which wishes to pursue the activity of collective portfolio management referred to in Annex II to the UCITS directive, the Authority has provided to the host state regulator—
i
confirmation that the firm has been authorised as a management company pursuant to the provisions of the UCITS directive;
ii
a description of the scope of the management company's authorisation; and
iii
details of any restriction on the types of UCITS that the management company is authorised to manage.
F55
The third is—
a
if the EEA right in question derives from the insurance mediation directive, that one month has elapsed beginning with the date on which the firm received notice, in accordance with sub-paragraph (11), that the Authority has given a consent notice;
b
in any other case, that either—
i
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
ii
two months have elapsed beginning with the date on which the Authority gave the consent notice.
F65ZA
This paragraph does not apply to a UK firm having an EEA right which is subject to the conditions of the reinsurance directive.
F75A
If—
a
the EEA right in question derives from the insurance mediation directive, and
b
the EEA State in which the firm intends to establish a branch has not notified the Commission, in accordance with Article 6(2) of that directive, of its wish to be informed of the intention of any UK firm to establish a branch in its territory,
the second and third conditions do not apply (and so the firm may establish the branch to which its notice of intention relates as soon as the first condition is satisfied).
F85B
If the firm is a UK investment firm, a notice of intention may not include ancillary services unless such services are to be provided in connection with the carrying on of one or more investment services and activities.
5C
In sub-paragraph (5B) “ ancillary services ” has the meaning given in Article 4.1.3 of the markets in financial instruments directive.
C26
If the firm’s EEA right derives from F9the banking consolidation directive, F11F10. . . or, in the case of a credit institution authorised under the banking consolidation directive, the markets in financial instruments 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.
F126A
If the firm's EEA right derives from the UCITS directive and the first condition is satisfied, the Authority must give a consent notice and information about the compensation scheme to the host state regulator unless it has reason to doubt the adequacy of the firm's resources or its administrative structure, and must do so within two months beginning with the date on which it received the firm's notice of intention.
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.
F137A
If—
a
the firm’s EEA right derives from the insurance mediation directive,
b
the first condition is satisfied, and
c
the second condition applies,
the Authority must give a consent notice, and must do so within one month beginning with the date on which it received the firm’s notice of intention.
F147B
If the firm is a UK investment firm and the first condition is satisfied, the Authority must give a consent notice to the host state regulator within three months beginning with the date on which it received the firm's notice of intention unless the Authority has reason to doubt the adequacy of the firm's resources or its administrative structure.
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, F15within the relevant period, give the person who gave that notice a decision notice to that effect; and
b
that person may refer the matter to the Tribunal.
F1612ZA
If the firm's EEA right derives from the UCITS directive, the Authority must inform F47ESMA and the Commission if it decides to refuse to give a consent notice, giving the reasons for that refusal.
F1712A
In sub-paragraph (12), “ the relevant period ” means—
a
if the firm’s EEA right derives from the UCITS directive, two months beginning with the date on which the Authority received the notice of intention;
b
in any other case, three months beginning with that date.
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
F18Subject to sub-paragraph (4D), 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
F19Subject to sub-paragraph (2A), the activities identified in a notice of intention may include activities which are not regulated activities.
F202A
If the firm is a UK investment firm, a notice of intention may not include ancillary services unless such services are to be provided in connection with the carrying on of one or more investment services and activities.
2B
In sub-paragraph (2A) “ancillary services” has the meaning given in Article 4.1.3 of the markets in financial instruments directive.
3
If the firm’s EEA right derives from F21the banking consolidation directive, F22markets in financial instruments 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 F23with such other information as may be specified.
F243ZA
If the firm's EEA right derives from the UCITS directive, the Authority must provide information about the compensation scheme with the information provided to the host state regulator under sub-paragraph (3).
F253A
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.
F263B
If the firm’s EEA right derives from the insurance mediation directive and the EEA State in which the firm intends to provide services has notified the Commission, in accordance with Article 6(2) of that directive, of its wish to be informed of the intention of any UK firm to provide services in its territory—
a
the Authority must, within one month of receiving the notice of intention, send a copy of it to the host state regulator;
b
the Authority, when it sends the copy in accordance with sub-paragraph (a), must give written notice to the firm concerned that it has done so; and
c
the firm concerned must not provide the services to which its notice of intention relates until one month, beginning with the date on which it receives the notice under sub-paragraph (b), has elapsed.
F273C
If the firm is a management company which wishes to pursue the activity of collective portfolio management referred to in Annex II to the UCITS directive, the Authority must send with the documentation provided to the host state regulator under sub-paragraph (3)—
a
confirmation that the firm has been authorised as a management company pursuant to the provisions of the UCITS directive;
b
a description of the scope of the management company's authorisation; and
c
details of any restriction on the types of UCITS that the management company is authorised to manage.
4
When the Authority sends the copy under sub-paragraph (3) F28or gives a consent notice, it must give written notice to the firm concerned.
F294A
If the firm is given notice under sub-paragraph (3A)(b), it may refer the matter to the Tribunal.
4B
F324BA
If the firm's EEA right derives from the markets in financial instruments directive, the Authority must comply as soon as reasonably practicable with a request for information under the second sub-paragraph of Article 31.6 of that directive from the host state regulator.
4C
Rules may specify the procedure to be followed by the Authority under this paragraph.
F334D
This paragraph does not apply to a UK firm having an EEA right which is subject to the conditions of the reinsurance directive.
F345
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
“Specified” means specified in rules.
F3520ZAF35Information 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).
F45Tied agents
Sch. 3 para. 20A and preceding cross-heading inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 12
20A
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.
F3620BF36Notice 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
F37sub-paragraph (1), (3B)(c) or (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
F38Sub-paragraphs (2) and (2A) apply 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 F39the 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,
F412A
The Authority may also exercise its power under section 45 in respect of the firm if the Office of Fair Trading has informed the Authority that it has concerns about any of the following—
a
the firm's skills, knowledge and experience in relation to Consumer Credit Act businesses;
b
such skills, knowledge and experience of other persons who are participating in any Consumer Credit Act business being carried on by the firm;
c
practices and procedures that the firm is implementing in connection with any such business.
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
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.
F46Information to be included in the public record
Sch. 3 para. 25 and preceding cross-heading inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 7
25
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.
F4426F44UK 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))