UK regulator urges EU Brexit accord

FCA has said financial firms should feel comfortable about relying on a transition deal agreed last month

Britain’s financial watchdog called yesterday for immediate coordination with European Union counterparts to ensure that Brexit is as smooth and stable as possible for markets.

The Financial Conduct Authority (FCA) has said financial firms should feel comfortable about relying on a transition deal agreed last month between Britain and the EU.

This covers the period between Britain’s planned departure from the bloc next March and the end of 2020, but EU officials say this was a political deal and will not be legally ratified until at least later in the year.

The FCA said it will need to spend about £30 million (Dh156 million) on dealing with the broad impact of Brexit on the financial sector.

Press ahead

Firms should therefore press ahead with plans in case of a “hard” Brexit next March, such as setting up new EU hubs. “It’s important that we have regulatory engagement now because we are dealing with practical issues ... and they affect both sides,” FCA chief executive Andrew Bailey said.

He told a news conference to discuss the watchdog’s latest business plan that he wants coordination to avoid disruption to derivatives and insurance contracts that straddle borders.

Starting coordination now would mean a framework is ready once transition has been legally ratified, Bailey said.

The FCA said it will need to spend about £30 million (Dh156 million) on dealing with the broad impact of Brexit on the financial sector and cut back or delay some areas of work.

One new area, however, is a report due from the watchdog in the third quarter on regulating cryptocurrencies.

“Time will tell if the need to manage Brexit will impact the FCA’s ability to effectively regulate conduct and protect customers,” said David Miller, a partner at KPMG.

Bailey said the FCA may even have to revise higher its Brexit costs depending on how negotiations pan out.