The Financial Times has reported that the Financial Conduct Authority (FCA) has banned four regulated EU investment firms from the UK. They are no longer allowed to offer financial products in the UK. Until Brexit, the UK was part of the license passporting, allowing firms regulated in one EEA member state to use their license in other regulatory regimes. After Brexit, a temporary permissions regime is in force for the UK. The FCA has now canceled the permission for the CySEC-regulated firms Arumpro Capital and Evest, Spain’s Esfera Capital, and Germany’s Inzmo Europe.
In its Final Notice dated January 18, 2020, the FCA notified the four firms that it had decided to cancel the temporary permission. The four investment firms were not deemed fit and proper by the FCA. The regulator is not satisfied with how the firm is conducting the business. The UK regulator has also criticized the willingness of the four firms to cooperate with the regulator. An open and cooperative approach would be an essential condition for permission.
In particular, the Authority is not satisfied that ACL is fit and proper having regard to all the circumstances or that it can be effectively supervised. Specifically, ACL has failed to be open and co-operative in all its dealings with the Authority…FCA Final Notice to Arumpro Capital
According to Financial Times estimates, there are currently around 1,000 EU firms operating under the temporary regime. The FCA has warned that it could cancel more permits if firms fail to meet the UK regulatory standards and are behaving uncooperatively. Companies can be excluded from the temporary permission regime if they miss their allocated slot to submit an application for permanent authorization.
Allegedly, the FCA struggles to process applications because of staff shortages and the increased workload in the post-Brexit environment.