Spotlighting the concerns and ramifications for the financial-services industry on the UK exiting the EU
A UK Government briefing paper (see HoC paper No. 07628 dated 1/1/116) has highlighted the prevailing uncertainties and significant considerations facing the industry, and especially in securing the future leading role and status of the City of London in international financing and settlement/clearing etc. As the UK Government continues its own internal exit-strategy and planning ahead of implementing the formal exit negotiation process during early 2017, it already faces legal challenges as to the proper exercise of ‘sovereign’ powers on this matter, as well as the lingering posturing and mutterings of large international financial institutions over possible relocations of at least parts of their business organisations depending on the eventual outcomes involved.
For its part, the UK regulator (FCA) is already operating its own internal team to specifically handle expected Brexit related developments and events. But it has also again underlined that (at present) it and the industry should expect to remain in ‘business-as-usual’ mode, with regulators duly supervising and enforcing against all existing rules and provisions, whilst also continuing to plan for the implementation of all known changes and revisions ahead.
The significance and the UK’s economic reliance on the employment and prosperity provided by the financial-services industry cannot be overlooked. Therefore, until such time as the precise nature and critical-pathway for any exit becomes clear and understood, organisations will continue to plan and progress largely on speculation and probable stress scenarios, and have to manage with some uncertainly and flexibility the decisions, priorities and interests of its own stakeholders. But it seems clear that some continuation or at least equivalence to the rights exercised under the regulatory ‘passport’ arrangements within and across EU jurisdictions will be a pivotal and preoccupying outcome. And this could well mean that in reality the UK will ultimately have to retain and continue to harmonise its own future regulatory framework to make this possible and cost-effective.