Brexit and the transitional regime for the provision of financial services based in the United Kingdom
With the end of the transitional period on the withdrawal of the United Kingdom from the European Union on 31 December 2020, EU law will no longer be applicable in the United Kingdom, including the European regime that allows credit institutions, investment firms and the management companies of collective investment schemes established in the United Kingdom to render its services under the freedom to provide services to investors in other Member States. Instead, the general regime applicable to entities based in third countries will be applicable to these entities.
In order to ensure an adequate transition of regimes, Decree-Law No 106/2020 of 23 December establishes a transitional regime that allows credit institutions, investment firms and the management companies of collective investment schemes established in the United Kingdom which are currently authorised to provide investment services and activities or services relating to collective investment undertakings in Portugal, to continue to do so on a transitional basis until 31 December 2021.
During the transitional period, these entities will have to terminate ongoing contracts and associated investments or, if they intend to continue to operate in Portugal, to begin the necessary authorisation procedures, notification or communication to the competent Portuguese authorities.
This Decree-Law also establishes that insurance contracts covering risks situated on Portuguese territory or for which Portugal is the Member State of the commitment, whose insurer is an insurance company with its head office in the United Kingdom, will remain in force until their term. However, they cannot be extended or amended, except to the benefit of the policyholder or if the amendment stems from the application of a mandatory legal rule.
Click HERE to access the Decree Law.
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[Photo by: Tom Athawes , available at unsplash.com]