Although emigration to sunnier climates was previously viewed as the remit of retirees, recent figures from the Office for National Statistics tell us that 56% of those who left the UK last year did so to further develop their career or explore other employment options. Non-UK based clients are therefore likely to require a full range of holistic financial planning for the many stages of their life rather than solely later life advice.
If you are carrying out a regulated activity with a client (for example, advising or issuing a financial promotion such as a newsletter) who is outside of the UK - but within an European Economic Area member state - then you will need to apply for passporting permission under MiFID and/or IMD and/or MCD. The permissions necessary may include:
Insurance Mediation Directive – IMD
This relates to activities in insurance based contracts such as term assurance, investment bonds and personal pensions.
Mortgages – Mortgage Credit Directive
The Mortgage Credit Directive is in fact European legislation, effective across the entire EU, which comes into effect on the 21st March 2016.
Whilst the UK has an existing robust regulatory system, this new regulation will impact upon both first and second charge mortgages; the latter of which is currently regulated by the FCA under Consumer Credit permissions. From the above implementation date, firms continuing to offer second charge mortgage loans from the 21st March 2016 will be required to be both authorised by the FCA and hold the correct mortgage permissions. This will affect lenders, administrators and brokers, and will bring them into line with their residential counterparts.
Markets in Financial Instruments Directive – MiFID
This relates to collective investments such as ISAs, OEICs, and unit trusts. SIPPs are likely to fall into the MiFID category but it is not straightforward and dependent on how they are set up.
To apply for this authority, firms will have to complete an application on FCA’s CONNECT system and confirm the countries into which they want to passport.
The FCA has produced a factsheet for firms who wish to advise clients who live in the EEA which can be accessed on the FCA website (for your reference, ‘Factsheet 0.25 – Passporting’).
Please note, for MCD regulated mortgages, although you can apply for this now, the passport will not be effective until 21 March 2016.
If you are dealing with clients outside of the EEA, for example Australia or Dubai, then you should speak to your PI insurer to check business would be covered under the policy and also contact the host regulator to check whether you would require authorisation via their regulatory framework.
It is always prudent to recommend the client seeks separate tax and legal advice from a suitably qualified adviser within their country of residence.
