On the 2nd September 2020, the Malta Financial Services Authority (“MFSA”) issued a Circular outlining the effect of Brexit on the applicability of Directive 2000/31/EC (the “Directive”) which covers a broad range of online activities.
The purpose behind the Directive is to ensure the free movement of information society services between member states and specifically targets services that are provided at a distance without the parties being present when goods are supplied and services that are being furnished by electronic means and at the request of the recipient. Additionally, information society services consist of selling services that give rise to online contracting when representing an economic activity and also extend to services that offer online information.
- Article 4 of the Directive
Article 4 of the said Directive lays down a principle excluding prior authorisation, that allows member states to ensure that the taking up and pursuit of activities relating to an information society service are not subject to prior authorisation or any other requirement. The MFSA notes that although Brexit technically occurred on the 31st January 2020, a transitional period was granted until the 31st December 2020.
Once this transitional period elapses, any license holders which offer online services to the United Kingdom can no longer operate according to the provisions of the Directive. However, if they would like to continue accessing the UK market such license holders would be required to contact the Financial Conduct Authority (“FCA”) without delay to seek permission to continue conducting their business within the UK.
Moreover, license holders should be aware of any implications that may arise and the time required for such authorisation, as well as, be aware of modifications that would occur to the applicable financial promotions rules that may influence their market. Additionally, license holders are required to keep the MFSA in copy with any ongoing correspondence with the FCA in this regard.
Feel free to contact us should you require any further information in relation to information society services.