We still do not have a date – or even a year – for the UK’s in-out referendum on European Union membership. But the drumbeat signalling an approaching confrontation has been growing louder of late, and the battle lines being drawn have increasingly involved financial services figures.
On one side of the fence are the likes of Peter Hargreaves, the Hargreaves Lansdown founder, who has become a prominent eurosceptic voice. On the other, a little surprisingly, is Mark Carney.
The governor’s speech last week, outlining the Bank of England’s contingency plans in the event of a Brexit, was unusually unequivocal on the merits of Britain’s EU membership.
Given the imposing regulations steadily emerging from European sources – the second Markets in Financial Instruments Directive (Mifid II) chief among them – I’d imagine a decent whack of investment advisers would fall into line alongside Mr Hargreaves on this topic.
Accordingly, a look at some of the other industry figures backing his Business for Britain reform group throws up familiar adviser, wealth and fund manager names.
It’s worth emphasising that leaving the EU wouldn’t necessarily mean the UK can simply walk away from Mifid et al. That’s because the regulation applies to all those in the European Economic Area (EEA) – a grouping that includes non-EU countries such as Norway.
I suspect the FCA is one UK institution that is looking for wiggle room on EU financial regulation Dan JonesIt’s true that a post-Brexit UK could opt to follow the example of Switzerland, which is a member of the single market but is not part of the EEA. But pinning hopes on this specific outcome is no way to plan for the future. To my mind, advisers fearing Mifid’s impact would do better to look to David Cameron’s attempt to renegotiate the terms of the UK’s EU membership.
I admit it sounds pretty foolish: the prime minister’s inability to even get the ball rolling on these renegotiations is part of the reason there is not yet any kind of referendum date.
The need for a rethink on financial regulation is said to be high on his agenda, however, and this is a viewpoint shared by Mr Carney; the governor noted the need for flexibility over EU rules in last Wednesday’s speech. Mifid is not going to be particularly high on their list of concerns, but I suspect the FCA is, in fact, one UK institution that is looking for wiggle room here.
On that basis, the success of Mr Cameron’s renegotiation, real or imagined, may provide leeway for a more lenient interpretation of Mifid here in the UK. This would particularly be the case if implementation takes place around the time of a referendum.
If Mr Cameron claims he has secured progress over financial regulations, that may provide the FCA with the political cover to put its own spin on some of Mifid’s harsher impositions.
For the investment industry, an FCA able to hold its own may just mean those referendum lines of engagement are redrawn.
Dan Jones is editor of Investment Adviser
