Brexit Preparations for UK Investment Firms
Many businesses have been receiving letters from the government’s Department for Business over the past weeks, asking if they are ready for new rules for business with the EU and giving the stark warning above. Of course, many of these ‘new rules’ don’t yet exist; perhaps not surprisingly against a backdrop where even the direction of travel on areas that will significantly impact the UK investment management community remains uncertain, pending agreement on fishing rights, level playing fields and how to resolve future UK/EU disputes.
Brexit Support for UK Investment Firms
Notably, the letter is not industry-specific, and investment firms will understandably continue to be most focussed on understanding implications for their marketing, trading, and transaction reporting. The FCA has set up a webpage with links to all EEA regulators’ Brexit pages
which is a useful resource to take note of.
Annex IV Reporting
Another area worth taking note of is registration under NPPRs and extended Annex IV reporting . For UK AIFMs intending to continue marketing their AIFs in the EEA in 2021, it currently seems unlikely that an agreement will be reached that will allow this without registration under NPPRs in each such jurisdiction (under AIFMD Article 42), as for all other ‘3rd country’ AIFMs. As ‘Article 42’ registrations trigger local Annex IV filings, as things stand, UK AIFMs should expect to need to make Annex IV reports to local regulators in each such jurisdiction, in addition to continued filing with the FCA.
Support with FCA Reporting
For many affected firms, this will mean acquiring specific software not required for FCA-only reporting, or outsourcing to a software-enabled specialist outsourcer with pan-European Annex IV filing experience, such as Wheelhouse Advisors. The upcoming Annex IV filing deadline on 31 January 2021 is not affected, so UK AIFMs’ attention should more immediately be focussed on required registration. Our wide network of professional advisors includes firms specialising in EEA registrations. Contact Alistair Youngs, email@example.com
regarding Wheelhouse Advisors’ pan-European Annex IV reporting solutions. Notwithstanding the imperative for investment firms to prioritise pertinent business critical matters specific to the investment management sector, the DoB’s letter does flag a few generic Brexit implications to be aware of. Where relevant, we’ve included these in our list below, along with our advice on each matter as an aid to your planning: Data protection
A great deal of uncertainty exists around what this will look like going forward: at one end of the spectrum, nothing may change; at the other, the UK and EU may continue to have identical rules but with each considering the other a separate sphere and with transfers between the two not automatically permissible if, on pure political grounds (as GDPR has been implanted in both), there is no “equivalence” determination. The ICO recommends that UK firms continue to follow existing legislation. Unless and until that guidance changes, it’s hard to envisage how the ICO could act against any UK firm doing what is has told them to do, so we think this is a pragmatic response. Whether and how their equivalent bodies in the EU27 nations might try to take action against a UK firm is unknown, but following the ICO’s guidance and UK law derived from an EU directive feels like a reasonable defence. We suggest firms continue to track developments via this dedicated page
on the ICO website. Business travel
An overview of requirements here
. Usefully, you can sign up for country-specific alerts on the same page. Recruitment from the EU
Where this is planned, you will need to register as a licensed visa sponsor. Our wide network of professional advisors contains a number of immigrations specialists who can assist firms with applications. Contact us
for more information