Financial services firms make Brexit plans

Banks and wealth managers want to continue trading without hindrance

Financial services companies are drawing up contingency plans ahead of Brexit amid concerns the two-year period to negotiate a deal to leave the European Union is too short.

Scottish Financial Enterprise (SFE) said the general view in the sector was that the negotiating period “is unlikely to provide sufficient time to negotiate the UK’s exit arrangement, for the UK Government to redefine its ongoing relationship with the EU or provide the lead time needed for firms to effect any reorganisation or restructuring which is required.

The warning comes as Michel Barnier, the EU’s chief Brexit negotiator, said the UK needed to take withdrawal talks “seriously”.

SFE stressed that, overall, the financial services industry in the UK was looking to maintain access to Europe’s single market in a way that is “comparable to the levels of access we currently have”.

In a submission to the Scottish Parliament’s Europe Committee, it made clear companies wished to continue their existing EU servicing with “as little disruption as possible” after Brexit.

Regulators at the Prudential Regulation Authority contacted firms in April this year asking for details of their contingency plans for Brexit, including for the most adverse scenario.

Accordingly, financial services companies are putting in place contingency plans and structuring solutions on the assumption that various scenarios could apply.

SFE – whose members include RBS, Bank of Scotland and Tesco Bank HSBC as well as ICAS, KPMG, Noble Grossart, Scottish Widows and Pinsent Masons – said: “For these different scenarios, the extent of any disruption will depend on the way that individual businesses require to restructure their current operating mode.”

Across the UK, the financial services sector contributes about £120 billion a year to the economy and employs 1.1 million people.

Scotland is home to the second-largest financial services centre after London, with the industry north of the border employing 86,000 directly as well as supporting another 55,000 jobs.

SFE said the task of converting some 12,000 European regulations and 7,900 statutory instruments into British law would be the “biggest legislative challenge that the UK has ever faced, both in its scale and complexity.”

The membership body added: “This challenge is compounded by the very tight timescale in which to deliver it.”

Picture: PA. A City trader reviews market changes. Financial services companies are drawing up contingency plans ahead of Brexit, and concerns have been expressed that the two-year period to negotiate a deal to leave the European Union is too short.