What is passporting and what do I need to know about it

Passporting is what enables the free movement of financial products and services by firms that are authorised in any EU or EEA state. Home ConsumerHub Explainers Whatis“passporting”andwhatdoIneedtoknowaboutit? Explainer–Whatis“passporting”andwhatdoIneedtoknowaboutit? Wherethereisalegalrequirement,firmsmusthavetheproperauthorisationtoprovidefinancialservicesinIreland. Theycangetthisauthorisationfrom: CentralBankofIreland AregulatoryauthorityinanothercountryintheEuropeanEconomicArea(EEA).TheEEAisafreetradezoneincludingmembersoftheEuropeanUnionaswellasIceland,LiechtensteinandNorway. Insomecases,aregulatoryauthorityina“thirdcountry”i.e.anon-EEAcountry. AsamemberoftheEEA,Irelandispartofasinglemarket.Thismeansthatproductsandservicescanbetraded,withoutbarriers,fromonecountrytoanother. Thefreemovementoffinancialproductsandservicesinthiswaytakesplaceunderasystemknownas“passporting”. Passportingin/out Therearetwoformsofpassporting–“passportingin”and“passportingout”. “Passportingin”iswhereafinancialfirmusesanauthorisationobtainedinanotherEEAMemberState(or,insomecases,fromacountrythatisoutsidetheEEA)tosellitsproductsorservicestoconsumersinIreland ThisiseffectivelyimportingfinancialproductsandservicesintoIreland. “Passportingout”iswhereafinancialfirm,authorisedbytheCentralBankofIreland,sellsitsproductsorservicestoconsumersinanotherEEAcountry. ThisiseffectivelyexportingfinancialproductsandservicesoutofIreland. Howispassportingpossible? PassportingispossiblebecauseallfirmsoperatingwithintheEEAmustcomplywiththesamerulesandregulationswhenprovidingfinancialproductsandservices. Allfinancialregulatorsandsupervisorsarealsorequiredtoapplythesamehighstandards. ThismeansthatthestandardofregulationandsupervisionofpassportingfirmsiseffectivelythesameacrossallEEAMemberStates. WhosupervisesfirmsthatarepassportingintoIreland? AfirmthatpassportsitsservicesintoIrelandis“prudentiallyregulated”bytheregulatororsupervisorinitshomecountry.  Prudentialregulationisatypeofregulationthatobligesfirmstomanageriskandholdsufficientcapital–orcashreserves–foritsbusinessneeds. Inadditiontothisregulation,mostfirmspassportingservicesintoIrelandarealsoregulatedbytheCentralBankofIrelandfor“conductofbusinessrules”. Howeverthereareexceptionstothisandyoushouldcontactthefirmifyouhavequeriesregardingitsauthorisationandregulatorystatus. WheretheCentralBankofIrelandregulatesfirmsforconductofbusinessrules,itisresponsibleforoverseeinghowthesefirmstreatcustomerswhenprovidingfinancialproductsorservicesinIreland. Insummary,allfirmsmustacthonestly,fairlyandprofessionally,andinthebestinterestsoftheircustomers.  WhyshouldIcareaboutpassporting? AlthoughthereshouldbenodifferenceinhowfirmspassportingintoIrelandaresupervisedandregulated,therecanbesomedifferencesinhowthesefirmsoperate. Forexample,thecomplaintsandcompensationprocessofafirmpassportingintoIrelandmaydifferfromanIrish-authorisedfirm. Alwayscheckafirm’scomplaintsandcompensationprocessesbeforeyoubuyanyfinancialproductorservice. Ifyouarenotsatisfiedwiththearrangements,lookatalternatives. HowcanIcheckifafirmispassportingintoIreland? TherearetwomainwaystocheckifafirmisauthorisedbytheCentralBankorispassportingitservicesintoIreland. Checkourregisters YoucanfindoutifafirmisauthorisedbytheCentralBankbycheckingourRegistersofAuthorisedFirms. Checkthefirm’sregulatorydisclosure Allfirmsmustdisplaywhat’sknownasa“regulatorydisclosure”ontheirwebsite,letters,emails,advertisementsetc. IfafirmisauthorisedbytheCentralBankitwillstate: “[Companyname]isregulatedbytheCentralBankofIreland” IfafirmispassportingintoIreland,itwillstate: “[Companyname]isauthorisedby[nameandcountryofregulator]andisregulatedbytheCentralBankofIrelandforconductofbusinessrules.” WhatelsedoIneedtoknow? Ifyoubuyfinancialproductsorservicesfromanintermediary(i.e.abroker),forexample,motororhomeinsuranceoramortgageloan,youshouldchecktheregulatedstatusofthefirmyouarebuyingtheproductfrom(i.e.yourbroker)andalsothatofthefirmthatisactuallyprovidingtheproduct. Youcandothisbycheckingthenameoftheinsurancecompanyorbanklistedonyourproductdocuments. Seealso: Explainer-HowdoestheCentralBanksupervisefinancialservicesproviders? InthisSection KBC/UlsterBankWithdrawalfromIreland–ConsumerFAQ Explainers AnimatedExplainerSeries COVID-19 BanknotesandCoins UnauthorisedFirms DepositGuaranteeScheme MortgageMeasures ConsumerGuidesandSurveys CentralCreditRegister WarningsandAlerts Rounding TrackerMortgageExamination BrexitFAQ-Consumers ContactsandComplaints IrishGovernmentBondsandTreasuryBills