What UK advisers have to do to work in EU post-Brexit

British financial advisers will need to jump through additional hoops if they want to work in the EU now that the UK officially left the Union.

This is because passporting rights that allowed them to do business across the EU no longer apply following Brexit, so they will need to follow a different route if they either decide to start working in the EU or keep doing business there.

Any UK adviser looking to base themselves and provide financial advice in one of the 27 member states will now require a work visa to be able to do so.

These have set requirements that every professional will need to meet to be able to obtain one, some of which may be linked to the levels of qualification a professional holds which might not always be fully recognised.

To understand what UK-based financial advisers will need to be able to work in the EU, International Adviser spoke with Aisa Group and the European Financial Planning Association (Efpa).

Not a consequence of Brexit

James Pearcy-Caldwell, chief executive of Aisa Group, said that for some countries this is not a novelty, as advisers who already  lived in European countries needed a specific licence to be able to provide financial advice in the EU before the 1 January 2021.

He said: “Pre-Brexit, a Vienna-based financial adviser already had to go and obtain a work visa in order to work as a financial adviser, and declare and pay all his taxes in Austria. So, this existed before Brexit, this isn’t a Brexit consequence.

“All that’s happened is that anyone who’s looking to move to Europe is going to require work visas, and most countries demand the advisers actually have a recognised qualification. And, again, I wouldn’t say this is Brexit, other than Brexit has highlighted it.

“There is this misunderstanding that, prior to Brexit, if you had a Level 4 qualification in the UK, you could go operate and live in any other country and give financial advice.

“That’s never been the case, because most countries, especially with Mifid rules, have now applied their own licences, which means that you need your own qualifications to be based in that country.

“And there’s only two ways of getting that. Regulators either have some kind of grandfathering approach, whereby, they recognise the fact you’re already qualified in the UK and they make you do some kind of bridging exam; or the other way is you have to sit the actual exam of that country,” he added.

Three senior members of Aisa Group had to sit the capital markets exam in the Czech Republic last year to gain European licences irrespective of passporting rights; and the same happened with staff members in its Cyprus office, Pearcy-Caldwell said.

Qualification equivalence or lack there of

He continued: “I think it’s wrong to blame Brexit on this lack of equivalence in exams because, actually, that already existed. But the key point here is that anyone moving into Europe now will not only need to have this bridging or specific exam, but they need to have a work visa as well.

“So, how do you get a work visa if you don’t have the relevant exam to actually give the advice in the country? I’m guessing that people will have to go and get the exam or the bridging exam before applying for a work visa to go and work in a country.”

The problem here is that not all EU member states allow British advisers to sit their own exams in the UK. For instance, Pearcy-Caldwell said, in Spain, Cyprus, Czech Republic and Italy, you have to physically sit the exams in that country.

But not all the EU countries will make their own exams available in English, as some of them will need to be taken in the local language.

Pearcy-Caldwell added: “There are some countries where the bridging exams are available in English. And there are some countries where the actual securities exams for Mifid are available in English.

“I actually don’t know how widespread that is, I certainly know of three countries in the European Union where you can do the exams in English. But I also know of at least two countries in the European Union where you have to do the exams in the local language, and there is no provision for English whatsoever.

“So, for anyone who can’t speak the other language, that’s going to be a huge barrier for them to remain in or move into the European Union, if those exams are not available in a language which they can use.”

Support

Most EU countries have Efpa membership which can help with bridging exams, like Aisa Group did in the Czech Republic.

Marta Gellova, chairwoman of Efpa Czech Republic, told IA: “I can imagine there are several obstacles UK financial advisers have to face when trying to work in different EU countries. At Efpa, we come across mainly requests dealing with qualification requirements for offering financial services.

“In some countries, rules can be very different for mutual funds and insurance-based investments, so this adds an additional level of complexity. We do not hear many issues about work visas, but we are sometimes asked to give some background about the nature of UK qualifications from a professional body, to support an individual application.

“This has always been the case in countries like Japan and is now the case in the EU post-Brexit.”

Due to the differing requirements when it comes to local language and English, Gellova said that Efpa has established a “process to allow advisers to obtain the certification in English language including the specific national modules”.

“As for Efpa qualifications, we recommend to obtain an Efpa certificate with EFPA Luxembourg in English and online.”

This is because the certificate can then be converted into a national Efpa certificate of another country “following a facilitated bridging process”, she said.

“Thanks to increasing number of advisers with such requirements, we are also widening the choice of continuing professional development (CPD) programmes in English.”

Alternative ways

All this, however, is applicable to any adviser who wishes to live and work in an EU country.

“But if you’re tripping in and out,” Pearcy-Caldwell said, “the old passporting rules in Europe still exist for those with EU regulations”.

This means that an adviser only needs to sit their exams in or of one EU country and then be able to take advantage of passporting rights within the bloc.

“That’s what the UK’s lost, that ability to trip in and trip out,” he added.

This changes if planners intend to set up a branch in one of the EU 27.

He continued: “If you set up a branch in another country, that branch has to follow the rules of the country it’s established in.”

Collateral damage

Pearcy-Caldwell believes, however, that there have been some side effects within the EU from the fall-out with the UK, especially around letterboxing, which led to “barriers being introduced within Europe”.

He told IA that Aisa Group wanted to use a custodian based in Luxembourg, which is something the firm would have been able to do a few years ago. But now the Czech National Bank told the firm it is only allowed to do that if the custodian sets up an agency and is registered in the Czech Republic.

“Now, that did not exist three years ago. What is actually happening here, in the effort to stop British companies letterboxing or getting past equivalence, the EU have set a whole series of rules, which are applied by national governments.

“What you’ve got now is barriers from one EU country to another EU country and it’s highly questionable whether the single market is actually functioning at the moment.

“So, what is being billed as a ‘Brexit problem’ is interestingly, for me, actually a European Union problem, because their pursuit of trying to come down on London effectively, the law of unintended consequences is this law is now followed within individual European Union countries as well.”