Passporting rights for appointed representatives or tied agents

A UK appointed representative (AR) has its own passporting rights under the Insurance Distribution Directive (IDD) and does not have to rely on its principal's passporting rights.

UK ARs that conduct insurance distribution activity can passport into other European Economic Area (EEA) states if its principal permits it to do so. 

The principal should send a joint passporting notification on the AR's behalf (notifying us as well as the AR so that they are aware of the AR's activities and accept responsibility for them).

The usual rules apply, so that the AR can only conduct regulated activities for which its principal has permission and it is permitted to carry on by the AR regulations (eg dealing as agent can only be carried out by an AR dealing with general and pure protection insurance).  

The principal is also responsible for ensuring that the AR complies with the relevant conduct of business rules. The AR would have the passport in its own right.

As defined in article 2(2) of the IDD, certain activities shall not be considered as distribution where the detailed criteria are met.

Tied agents under MiFID

The same process applies for a UK-authorised firm that wishes to use a registered UK tied agent to conduct investment business in another EEA state. Where the tied agent is located in another EEA member state this would need to be notified under the right of establishment.

The tied agent is restricted in what activities it can conduct as per article 29(1) of MiFID. The tied agent can only passport under the rights of the principal, it cannot passport in its own right.

UK-authorised payment institutions with several agents

A UK-authorised PI can provide services in another EEA state through an agent established in the UK (using a ‘services’ passport) or in another EEA state (using its right of establishment).

In relation to cross-border business more generally, whether a passport is required and if so in what form will be dependent on the facts. For ’services’ business there will sometime be a question of what, if any, activities are being conducted in the other EEA state. In some instances there will not be a requirement for a passport because of the nature of the services being provided.

But where there is the establishment of a physical presence (for example, offices and/or agents) in another EEA state, for use by you, this will trigger the need for an establishment notification.

The appointment of an agent established in another EEA state is likely to amount to an exercise of a right of establishment where the agent:

  • has a permanent mandate in relation to payment services
  • is subject to your management and control
  • is able to provide payment services on your behalf