Accordingly, whilst a regulated adviser can provide regulated advice and regulated contracts in his home country to nationals of that home country as well as to foreign nationals resident in that same country, this same financial adviser can now also export his home country's regulated services and products to another EU country and their citizens – as long as the adviser has obtained the appropriate licence from the other country to do so.

This exporting is effected by 'passporting' the home country’s financial regulatory rights into another country, since it is now the country in which the consultant’s practice is situated that dictates the country of regulation, and not the place from which advice is provided.

As a result, however, 'passporting' does NOT allow the regulated adviser of one country to provide financial advice or services concerning another country: this is the role of that other country’s adviser, else the adviser would need to also be directly regulated in that other country by that other country's Regulator, and having that other country's appropriate professional indemnity insurance and financial guarantees. Indeed, France actually confirms that in order to be a French financial adviser, the adviser has tobe resident in France (art. L541-2 of the Code Monétaire et Financier’).

Historically, the aim was to simply enable a financial consultant of one country to continue advising their client who had moved to another EU country. The EU market expansion rules then further broadened this right to now enable a resident of one country to seek regulated advice and investment contracts from another EU country.

But the right of a resident to seek advice and investments from another country is not to be confused with the right of the adviser to advise on his home country’s laws and investments in another country — the ‘passporting’ right is NOT designed to allow a regulated adviser of one country to advise on another country’s financial laws or products, especially as this adviser would probably not be insured for such actions in his home country. In any event, and as is stated above, a foreign resident advising on French financial matters as defined in article L.321-1 of the ‘Code Monétaire et Financier’ is strictly forbidden under article L.541-2 of that same code.

To confirm this position in practice, consider that all practitioners have to be regulated in order that they can then be professionally insured. If regulated in the UK on UK law, UK tax and UK investment and other UK contracts, the professional indemnity insurance will only cover claims falling under these UK areas - and not claims for advice relating to another country. Likewise, if regulated in France on French law, French tax and French investment and other French contracts, the professional indemnity insurance will only cover claims falling under these French areas — and not claims for advice relating to another country or another country’s products. Indeed, the UK FSA Ombudsman web site itself confirms that only claims falling under its remit can be considered, resulting in that only claims which fall under UK Financial Services Authority area of cover can be considered … so excluding claims concerning advice given on all non-UK matters. This same situation applies to other countries.

Accordingly, for your protection, you should only seek financial advice relative to a country from those professionals who are regulated and professionally insured in that same country.

Pelican Consulting is fully regulated and insured for financial advice and brokerage activities in France, and has ‘passport’ rights to export this advice to the UK, Belgium, Luxembourg and Ireland.