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Our current position on Brexit Standard Life Aberdeen welcomes the agreement reached between the UK and the EU on a Free Trade Agreement. We believe this agreement to be mutually beneficial and we encourage both sides to continue working towards closer economic co-operation.
As expected, the EU-UK FTA does not cover financial services substantively or provide for a bespoke market access regime for the UK. However, we are encouraged by the Joint Declaration which states that both parties will agree by March 2021 a Memorandum of Understanding (MOU) establishing a framework for structured regulatory cooperation on financial services.
Notwithstanding this Joint Declaration there is already provision in place for asset managers to continue to delegate portfolio management services from the EU to the UK (as confirmed by industry supervisors on 17 July 2020). We have also taken other specific actions to ensure the continuity of our services to our customers, clients, and operations including:
Establishing an EU MiFID firm in Dublin, Aberdeen Standard Investments Ireland Limited, to provide portfolio management and distribution services to clients in the EU27. This company is now fully staffed and operational, contracting with a range of EU clients, and we expect the business to expand further over time.
Restructuring our EU branch network under the new MiFID firm to provide services and support the distribution of Group products.
Expanding the activities of our Luxembourg-based management company to provide services to an increased number of Irish and Luxembourg domiciled funds.
SLA will continue to closely monitor regulatory developments in the EU and UK as the new relationship evolves. As a global investment manager, we have extensive experience in adapting to regulatory change and working across borders.
With the end of the withdrawal agreement on 31 December 2020, and to ensure a smooth transition with or without a Free Trade Agreement, the FCA opened their Temporary Permission Regime (TPR) on 30 September 2020 enabling firms with EEA domicile funds to continue to ‘passport’ these into the UK after 31 December 2020.
You can read the latest FCA update from 7 October 2020 .
The FCA introduced a Temporary Permissions Regime (TPR) as part of no-deal Brexit planning. This lets investment managers with funds domiciled in the European Economic Area (EEA) continue to operate in the UK in the event of a no deal Brexit. Typically these funds will have the prefix LUX (Luxembourg) or IE (Ireland) ISIN prefixes on our platforms.
To qualify for the TPR, the investment manager had to register its fund(s) with the FCA. Registration had to be made at fund level, not in aggregate as a fund manager.
If an investment manager failed to register a fund(s), or decided it wants to stop passporting fund(s) after Brexit, the FCA automatically assumed the fund(s) fell under the Financial Services Contracts Regime (FSCR). UK investors would still be able to stay invested in a fund (the fund manager may withdraw access sooner), and would be allowed to sell-out either incrementally or in totality. They would not, however, be able to buy into the fund and it would be closed to new investments.
The FCA confirmed that the TPR Register would only be available for public viewing after 31 December 2020. We also believe that the Register would only include the fund name without any unique identifier such as a CitiCode or ISIN.
The FCA is re-introducing the TPR as part of its no deal Brext planning for 31 December 2020, and it will work in the same way as noted above for the position pre Withdrawal Agreement. The TPR opened on 30 September 2020 but will not be published until 1 January 2021.
We’re writing to all fund groups with EEA-domicile funds available on our platforms, asking for details about which funds have been registered under TRP and which default to FSCR. Our aim is to make sure our platforms offers access to those funds registered with TPR on 1st January 2021, but cannot categorically guarantee this given the TPR Register will not be published until 1 January 2021.
We’ll make every effort to provide you with the necessary reassurances, but you should contact the fund group if you have any specific concerns and to check how this might impact impact your clients.
The UK faces the prospect of being regarded as a third country when it exits the EU. As a result, some transfers of personal data to the UK require additional measures to ensure compliance with Data Protection law. We have put in place the necessary arrangements, including amendments to existing contracts with third parties processing personal data on our behalf, to support the continuation of cross-border personal data transfers to the UK post Brexit.
Periods of increased market volatility can have an impact on investment valuations. We'll keep you updated on any fund suspensions.
Please read our dedicated market volatility page.