FCA chief: Brexit shouldn't end free trade in financial services

The FCA received a total 900 whistleblowing cases in 2016/17

The FCA received a total 900 whistleblowing cases in 2016/17

"Does Brexit mean abandoning the use of regulatory co-operation to ensure sufficient alignment of standards and outcomes so that open markets can prevail?"

But he admitted the picture he was painting was "what we should aspire to" rather than a definite prediction.

"When I hear people say that firms need to relocate in order to continue to benefit from access to European Union financial markets, I start to seriously wonder", he said. Big financial firms are drafting contingency plans for Britain's future outside the single market.

Bailey added that after Brexit there should be "strong co-ordination" between United Kingdom and EU regulators to ensure that firms can move freely between London and the European bloc.

What Brexit will look like and how it will work seem increasingly to depend on where you are standing.

Andrew Bailey, chief executive of the Financial Conduct Authority, told a Reuters Newsmaker event that such a transition period was needed to avoid disruption to markets.

That timetable seems very ambitious, the talks have yet to agree on such details as citizens' rights or the bill for leaving, if any.

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Other European countries have indicated they would like to see more business, such as the clearing of euro denominated derivatives, which London dominates, move to cities remaining within the EU.

The UK's top financial regulator has strongly rejected suggestions that free trade and open markets in financial services will be impossible after Brexit.

"With the advent of much stronger global standards in the wake of the financial crisis, we are in a better place than ever before to create a strong platform of co-ordination", Bailey says.

"There is ample evidence that open markets in financial services and free trade can exist safely without common detailed rules and shared regulatory institutions", Bailey said.

The FCA boss, who also led the Prudential Regulation Authority, followed Bank of England governor Mark Carney in calling for a temporary deal for firms to adjust to the new regime.

Bailey made clear that he does not necessarily believe this needs to be the case.

He said he hoped there could be a sensible and pragmatic solution to maintaining open markets in financial services and that four key elements that would be required to make that work: "comparability of rules, but not exact mirroring; supervisory co-ordination; exchange of information; and a mechanism to deal with differences when they occur".

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