Aifa deputy director general Fay Goddard says the trade body has been in discussions with the FSA for sometime about the exact definition of cross-border activities.
She says the FSA has confirmed that UK firms giving investment advice to clients residing, either temporarily or permanently, in another European Economic Area state could be treated as operating cross-border by the regulator of that state.
To operate cross border, firms need to opt-in to the Mifid regime by applying to the FSA for a Variation of Permission, costing £250, and a Passport Notification. Mifid comes into effect on November 1.
The FSA has published a factsheet containing help for advisers wishing to continue to advice clients living in Europe.
Goddard says: “Although firms who advise from the UK may not be in breach of FSA rules, there remains the risk that any advice given directly to a client while they are residing abroad, whether by phone, email or letter, could potentially breach the rules of that country.
“Firms with EU clients will need to carefully consider their options before the rules that implement Mifid come into force on 1 November. This may be to opt-in to Mifid and continue to service these clients or to stop advising them and refer them to a firm with the necessary permission and passporting rights.
“Every cloud has a silver lining and firms who do opt-in should perhaps think about exploiting their superior knowledge, skill and ability to advise from a wide product range and take on the EU market.”