Discussions underway on access to Irish funds post-Brexit

The Financial Conduct Authority (FCA) and Central Bank of Ireland (Central Bank) are hoping to sign a formal memorandum of understanding or some other form of agreement by 29 March 2019, the date that the UK is due to leave the EU, according to the Financial Times (registration required). This agreement is expected to cover both the continued delegation of portfolio management to the UK by Irish funds, and the continued sale of Irish funds in the UK.

Just under £500 billion worth of funds under management in Ireland, or about a quarter of the Irish funds industry, is held on behalf of UK investors, the FT said. The FCA and the Central Bank have declined to comment on the press reports.

The UK Treasury has announced its intention to allow EU financial services firms to continue their UK activities for a "time-limited period" after Brexit, even in the absence of agreement on formal transitional arrangements between the UK and EU. The regulators have said that they are preparing for "a range of scenarios", including 'no deal' between the UK and EU and no transition or implementation period.

Last week, the European Securities and Markets Authority (ESMA) issued a new public statement warning firms of the importance of timely applications for authorisation to operate in an EU27 state in order to continue to provide services to customers in the EU once the UK is no longer a member, and of ensuring any information contained in that application is "complete and accurate".

Dublin-based financial services expert Gayle Bowen of Pinsent Masons, the law firm behind Out-Law.com, said that while EU laws limit bilateral engagements between the UK and Irish regulators to some degree – for example, where used to provide UK-based financial institutions with privileged access – it should not preclude a regulatory authority addressing risks identified by them in the context of Brexit.

"We would welcome any discussions between the FCA and the Central Bank that will provide clarity on the sale of Irish funds into the UK and the delegation of portfolio management from Irish funds to UK managers post-Brexit," she said.