BREXIT: UK must retain access to EU single market, new FCA head says

Out-Law News | 21 Jul 2016 | 2:40 pm | 2 min. read

The UK government must push for continued access to the EU's single market for financial services as part of the forthcoming 'Brexit' negotiations, the new chief executive of the Financial Conduct Authority (FCA) has said.

This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.

Speaking at the regulator's annual public meeting, Andrew Bailey confirmed that he expected "no great bonfire of regulation" as a result of the UK's vote to leave the EU. He added that "robust global standards of regulation" were essential at both EU and international levels for "sustained international trade" in the services regulated by the FCA, in comments reported by the Financial Times.

Bailey used his remarks to reconfirm that the FCA would "continue to implement EU legislation until the future is clear, [which] that is a legal requirement". Speaking to journalists after the event, he also confirmed that the FCA would not "[put] work on hold because of Brexit", with specific reference to its statutory objectives and the issues which arose from the recent Financial Advice Market Review (FAMR), Money Marketing reported.

The FCA also intends to publish a 'mission statement' for consultation this autumn, based on balancing its duty towards consumers with the roles of financial firms and the regulator itself, Bailey said.

Financial services expert Tobin Ashby of Pinsent Masons, the law firm behind, said that Bailey was "saying the right things" from an industry perspective, "particularly on pushing ahead with the recommendations of FAMR".

"As the Brexit process intensifies, and resourcing pressures inevitably increase, the challenge for both the regulator and the Treasury will be to ensure that sufficient resource remains available to keep that important work, and the related support for FinTech innovation, moving forwards at an acceptable pace," he said.

"Continuing cross-border trade has been a particular concern for the financial services industry throughout the Brexit debate, and it will be important in influencing the government's agenda that the industry's lobbying it backed up by the FCA and actually aligned to the regulator's own competition concerns. Bailey's statements are therefore welcome, even though the real work of agreeing what access to the single market can mean and what agreements can be reached with other countries is yet to begin in earnest," he said.

A new FCA 'advice unit', set up in response to FAMR, is already supporting firms that are looking to develop low-cost, automated advice models to fill the gaps in the current market identified by the review. The group is based within the FCA's 'Project Innovate' innovation hub, which was set up to provide support and advice on how to meet regulatory challenges to new and established financial firms seeking to introduce innovative products and services to the market.

New chancellor of the exchequer Philip Hammond, who replaced George Osborne as part of prime minister Theresa May's reorganisation of the government, has already indicated his desire for the UK to seek access to the single market as part of the Brexit negotiations. Bailey welcomed this commitment at the FCA meeting, and added that the FCA would also support the government’s work to seek trade agreements with other countries.

"From an FCA perspective, there is, for instance, no doubt that our objective of ensuring healthy competition in UK financial markets is supported by cross-border trade in financial services," he said. "More so than for trade in goods, for internationally traded services of the type we regulate the key to sustained international trade is robust global standards of regulation."

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