The Financial Conduct Authority has told European firms wishing to remain in the temporary permissions regime that they need to meet certain standards to continue operating in the UK.
The regime was designed to 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.
However, the regulator said today the temporary permissions regime should only be used by firms who want to operate in the UK in the long-term and meet its standards to do so.
As such firms may be asked to stop undertaking new business or could be removed from the regime if they miss their ‘landing slot’, fail to respond to mandatory information requests, have no intention in applying for full authorisation, or if their authorisation application is refused.
Emily Shepperd, executive director of authorisations at the FCA, said: “The UK is open for business, but not to firms who do not meet our regulatory expectations.
“We expect firms operating under the regime to be responsive to our requests for information, and that are coherent in their business planning. We will continue to act against firms that fail to meet our standards.”
Last year, in the FCA's business plan, the regulator said there were 1,435 EEA firms currently accessing UK markets via the temporary permissions regime.
At the time, Rathi said the FCA wants to take a tougher approach, which will involve some “contentious outcomes”, meaning there would be a review of all firms seeking to enter the UK authorisation gateway and not all of those under the regime would automatically make it through.
The regulator also said it would monitor complaints about newly authorised firms in their first three years of authorisation.
It anticipates that by giving more support to firms in the early years, the number of relevant Financial Ombudsman Service complaints should fall over time.
So far, the FCA has cancelled the temporary permissions of four firms, which it said, did not respond to mandatory information requests despite multiple opportunities.
Firms that have had their permissions cancelled can no longer conduct regulated business in the UK and would be committing a criminal offence if they did so.
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