This post was written by Carly Phillips-Jones

On 18 January 2022, the FCA published a new webpage setting out its approach to firms in the temporary permissions regime (TPR) that do not meet its expectations. The purpose of the regime is ensure that European firms operating in the UK via a passport when the Brexit transition period ended could continue operating temporarily while they seek full authorisation in the UK.

The FCA's position is that the TPR should only be used by firms who want to operate in the UK in the long-term, are preparing for full UK authorisation and meet the required standards.

The FCA will seek to ensure that firms, where appropriate, cannot expand their UK business while in the TPR and if firms do not voluntarily leave the TPR, the FCA will take action to remove them. This may result in the FCA contacting a firm's home state regulator and publishing a final notice in the UK.

The FCA focuses on four scenarios where this would apply:

  • FSMA firms (i.e. firms in the TPR that previously passported into the UK under Sch. 3 or Sch. 4 of FSMA) that miss their landing slot to apply for full authorisation.
  • Firms that fail to respond to mandatory information requests.
  • Firms that do not intend to apply for full authorisation.
  • Firms whose authorisation application is refused.

The actions that the FCA will take against such a firm may involve:

  • Taking steps to remove them from the TPR.
  • Asking the firm to confirm they have voluntarily stopped undertaking new business (i.e. onboarding new customers) or, if they do not voluntarily agree to this, seeking to use FCA powers to prevent firms from doing so.

A firm may avoid these actions if they voluntarily apply to cancel their temporary permission completely and, if eligible, enter the supervised run-off (SRO) mechanism within the financial services contracts regime.

In a press release also published on 18 January 2022, the FCA announced that it has cancelled the temporary permissions of four TPR firms that, despite multiple opportunities, did not respond to mandatory information requests.