The MFSA’s Circular to the Financial Industry on Brexit Readiness

November 26, 2020by mjmeurope0

On 18th November 2020, the MFSA issued a circular to Maltese licence holders (insurance, investments and credit and financial institutions) and UK entities offering financial services in Malta, outlining their expectations now that the Brexit transition period is about to end.

UK Licensed Entities Providing Services in Malta

From 1st January 2021, the provision of financial services from the UK in Malta by way of freedom of services and/or freedom of establishment will no longer be possible. Consequently, UK entities currently offering financial services to Maltese customers should ensure they have obtained the necessary authorisation from an EU competent authority and have effectively established themselves before the end of the transition period.

UK Investment Firms and Investment Funds

The temporary permission regime is no longer applicable and therefore, UK entities passporting into Malta will be treated as third country firms.

UK UCITS and AIFs Marketed in Malta

From 1 January 2021, UK UCITS and UK AIFs will become non-EU AIFs and therefore they will not be able to continue benefitting from the passporting rights under Chapter XI of the UCITS Directive and Article 32 of the AIFMD respectively. These funds will be permitted to be marketed into Malta under the National Private Placement Regime (NPPR). The MFSA will start accepting applications for marketing under the NPPR as of 18 November 2020. UK UCITS and UK AIFs are encouraged to prioritise these applications in order to avoid any last-minute delays and allowing for due processing time by the Authority.

UK Insurance Undertakings and Insurance Intermediaries

These undertakings will no longer be allowed to conclude new insurance contracts or establish, renew, extend, increase or resume insurance cover under the existing insurance contracts in Malta, unless they are authorised by the MFSA. If no authorization is obtained before UK’s withdrawal, these undertakings will be permitted to carry out an orderly run-off of the business which became unauthorised. The MFSA expects a UK insurance undertaking which decides to carry out an orderly run-off to formally inform the MFSA in a timely manner.

Maltese Licence Holders Providing Services in the UK

The termination of the EU-UK passporting regime, will mean that Maltese licence holders wishing to continue providing financial services in the UK should do so in line with the guidance provided by the relevant UK financial services regulator (FCA, PRA/BoE) including by applying to join the relevant UK TPR before 31 December 2020, unless they have already done so.

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