Contributed By Winston & Strawn London LLP
Requirements and Procedures
In the UK, authorisation requirements vary by level and type of activity. While there are licence requirements for providers of consumer credit, wholesale lending activity is generally unregulated and, provided that the lender will not be accepting deposits or conducting investment business within the UK, it will not require authorisation from the FCA and the Prudential Regulation Authority (PRA).
However, the position is different in relation to transactions or arrangements involving bonds, securities, debentures and other instruments creating or acknowledging indebtedness. Persons carrying out certain activities in relation to these types of instruments must be authorised under the Financial Services and Markets Act 2000, unless they have an exemption. Similarly, persons intending to carry out regulated consumer credit activities will have to apply for authorisation.
Subject to fulfilment of various conditions under the relevant EU directive, certain rights currently apply to credit institutions and other authorised financial services firms headquartered in a member state of the EEA where such firms seek to also carry on permitted activities in another EEA member state on the basis of its home state authorisation. This is done by the credit institution or firm exercising the right of establishment (of a branch and/or agents) or providing cross-border services and is referred to in the Financial Services and Markets Act 2000, as amended (FSMA) as an EEA right, the exercise of such right being known as "passporting".
A credit institution or firm headquartered in the EEA which qualifies for authorisation will have permission to carry on each permitted activity in the UK which the credit institution or firm is authorised to carry on in its home state that is also a regulated activity under FSMA.
If the UK leaves the EEA pursuant to the government’s Brexit plans, unless specific arrangements are negotiated, passporting rights will no longer be available.