Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), provided an update on the potential outcomes of Brexit for the financial services industry.
Bailey reiterated the FCA’s neutrality on the substance of Brexit, stating that: “We continue to prepare for a full range of possible outcomes and scenarios, which is what we must do as a public body.
A strong commitment to open global financial markets remains a priority for the FCA, according to Bailey, who said there is no reason to believe that Brexit should restrict access to financial markets. “The UK’s financial markets are – as the IMF has described them – a global public good, and we want to keep it that way.
“At the FCA, we continue to plan for all potential outcomes, and that of course includes the possibility of no deal exit. I say that deliberately, not because I take a view on the substance of the matter, but because in terms of contingency planning it would be foolish not to do so.”
Bailey outlined the major changes that will impact firms engaging with the FCA, including updating the Financial Services Register to take account of the Temporary Permissions Regime (TPR); the switchover for the Market Data Processor; and changes to the Handbook website to accommodate onshoring changes and new materials.
“We continue to engage with industry on the immediate operational and timing concerns of reporting counterparties under MiFID and EMIR,” continued Bailey. “In line with statements already published, we expect firms and other regulated entities to take reasonable steps to comply with the changes to their reporting obligations by exit day. But where they have done so, we intend to act proportionality.”
Bailey also emphasized the regulatory body’s commitment to prioritising consumer protection in financial services, regardless of the consumer’s location following Brexit. Despite this, Bailey noted that there remains a risk that lack of legal certainty in some jurisdictions will create adverse outcomes for some consumers.
“We will work with firms to make sure their contingency plans are executed effectively,” concluded Bailey. “We will continue to engage closely with our EU counterparts and I hope we can commit to take the necessary joint activity to deal with issues that arise. In our view, the UK and the EU should be able to find each other equivalent on day one by virtue of having the same legislation and well established supervisory approaches.”