With the looming possibility of the United Kingdom crashing out of the European Union (EU), UK-based firms must protect their abilities to continue to sell their services to customers in the remaining EU countries. To do so, business must notify the Financial Conduct Authority (FCA) that they plan to seek full regulatory authorization.
This moves allows new and existing regulated UK business to continue “passporting” for a limited period of time if Brexit goes through without a deal. The firms have until March 28, 2019 to notify the FCA that they want to enter the temporary permissions regime via its Connect system. Those that fail to notify the FCA will not be able to use the regime.
When businesses based in one country in the European Union are permitted to trade freely with the 27 other countries in the union, they are passporting. This is permitted with minimal additional authorization. If a “no deal” Brexit occurs, this creates a negative situation for payment firms within the EU because they lose this right to trade freely.
What’s Happening with Brexit?
Prime Minister Theresa May brought her Brexit deal back to Parliament today, leaving Britain’s government and its lawmakers in a political stalemate over the deal and it details.
Pro-Brexit members of Parliament are encouraging the government to prepare for leaving the EU without a deal. Those on the opposite spectrum, as well as businesses, oppose this, fearing economic turmoil between Britain and the EU due to tariffs and customs checks. All parties are putting pressure on Parliament to prevent the government from a no-deal Brexit.
The House of Commons today voted to stop the government from delaying vital details as Brexit approaches in March. If Parliament rejects the deal May made with the EU, the government needs to come up with another plan within three days.
More Details About Enrolling in Temporary Passporting
The temporary regime also allows European Economic Area (EEA)-based investment funds that already market in the UK under a passport to continue to do so temporarily. Those that fail to take advantage of this opportunity will lose their abilities to market their funds the way they did before the exit. New sub-funds of EEA Ucits will be the only exception. Those firms and investment funds that were given temporary permission will be listed on the Financial Services Register. There is no fee associated with the process of signing up with the regime.
More History on the Temporary Permissions Regime
The FCA pushed forward with its temporary permissions regime in December 2017, treating it like a backstop if the implementation regime were to go away suddenly.
If there is no deal, the British government has stated that the UK would enter into a third-country customs regime with the EU. This would not only disrupt supply chains and delay imports and exports, but any products sent to the UK from the union would have the pay UK import VAT up front because they would be viewed as imports from third countries. This means consumers pay more for any goods that arrive this way.
As the British government and its lawmakers continue to wait out Brexit, UK-based businesses will need to take the appropriate steps to ensure they can passport at least temporarily.
UK-based firms that are in need of payment processing services can turn to eMerchantBroker.com (EMB). At EMB, we work with new and existing businesses, like merchants that have been rejected or terminated by other processors, and high risk merchants, as well as those with bad credit, no credit, or a history of excessive chargebacks. Allow us to find a payment solution that works for your business.