Brexit and third country firm cross-border authorization regarding investment services
In accordance with the Investment Services Act (747/2012) as amended by the Act 294/2019, investment services and activities together with ancillary services can only be pursued in Finland to eligible counterparties and professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU without establishing a branch in Finland by third country firms (investment firms and credit institutions) that have been granted authorization.
Application during the transition period
From Brexit perspective an EEA investment firm or credit institution which currently provides investment services or activities in Finland under a relevant EU passport and whose home state has notified of its withdrawal from the EU in accordance with Article 50 of TEU has to apply for the cross-border authorization by the date the withdrawal of said Member State takes effect in order to continue to provide services in Finland. A firm which has applied for an authorization on time can continue to provide investment services and activities together with ancillary services to professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU and eligible counterparties in accordance with the terms of its EU passport in Finland until the FIN-FSA has processed the firm’s authorization application.
Applications can already be filed. The time for application process is calculated from the date when the withdrawal takes place. The applicant shall be informed within six months of the submission of a complete application, whether or not authorization has been granted. The maximum time to process an application in Finland is one year from the date the application was filed, in this case from the date the withdrawal takes place. Under the terms of the Withdrawal Agreement EU law will continue to apply to the UK between 1 February and 31 December 2020 as if it were a Member State. As a consequence of this transition period new applications can be filed until the end of 2020 and the time for application process is calculated thereof for all the applications already filed and for all the new ones.
For the time being, the FIN-FSA has not prepared application form for this type of application, so free-form is an assumption. Documents/information can be attached in pdf-format. If needed, the FIN-FSA will ask the originals later.
Application for authorization can be made in Finnish, Swedish or English.
Application after the transition period
Applications for authorization can be filed also after the transition period. The authorization process is mainly the same. The application should include the same information on the UK firm and its cross-border activities in Finland as those filed during the transition period. The difference is that those UK firms that have applied for authorization after the transition period cannot continue or start providing services in Finland until the FIN-FSA has granted the authorization. The time for application process is calculated from the date the application is filed, not from the end of transition period. The authorization process costs 1 700 euros and is charged after the authorization decision is made by the FIN-FSA.
Investment service providers applying for authorization must submit the application to the FIN-FSA Registry: kirjaamo(at)fiva.fi.
The third country firm cross-border authorization process costs 1 700 euros and is charged after the authorization decision is made by the FIN-FSA. In addition to this, third country firms authorised in accordance with Chapter 7, Section 5(2) and (4) of the Finnish Act on Investment Services (747/2012) are subject to a yearly supervision fee. The Act on the Supervision Fees of the Financial Supervisory Authority (879/2008) contains detailed provisions on the fee-paying entities and the basis of payment for each fee-paying entity’s supervision fee.
The cross-border authorization application should include the following information on the UK firm and its cross-border activities in Finland:
- All relevant details of the firm (legal name and any other trading name to be used, legal form, registered office and address, members of the management body, relevant shareholders (10 % or more), contact details);
- A certified copy of the articles of association;
- A certified copy of the licence/authorization the third-country firm holds in its home state;
- An extract from the commercial register (or similar) where the third country firm is registered, which indicates the board of directors (management body) and the CEO of the firm as well as their deputies;
- A programme of operations setting out the investment services and/or activities, ancillary services and financial instruments to be provided on a cross-border basis in Finland;
- The name of the home state regulator responsible for the firm’s supervision in the third country concerned and in case of more than one, the division of duties between those;
- A permission from the home state regulator for the third-country firm to carry out cross-border activities in Finland, where such permission is necessary under home state law; and
- An extract of the decision made by the relevant body of the third country firm
- to continue service provision in Finland in line with the EU passport in place before UK exit day from the EU to eligible counterparties and professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU and
- to apply for an authorization in Finland with a reference to the Act on Investment Services Section 5, paragraph 7 (2) and (4).
UK firms which have applied for authorization
UK firms which have applied for a third country firm cross-border authorization and can continue to provide investment services and activities together with ancillary services to professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU and eligible counterparties in accordance with the terms of their EU passport in Finland until the FIN-FSA has processed the firm’s authorization application.
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