Brexit will not necessarily lead to de-regulation, the Financial Conduct Authority’s chief executive has warned.
Andrew Bailey, who moved from the Prudential Regulation Authority at the start of this month, said: “This [Brexit] is not going to lead to a bonfire of regulation, what will come out critically depends on the agreement government reaches.”
Speaking at the FCA’s annual public meeting today (19 July), he said that while a lot of rules were UK-focussed in wholesale regulation, red tape was inherently cross border with the retail side.
During the question and answer session, Oliver Lodge, director of Owl Regulatory Consulting, asked Mr Bailey to elaborate on comments he had previously made about the impact of Brexit on regulation.
In the immediate aftermath of the UK’s vote to exit the European Union, the FCA stated financial regulation currently applicable in the UK derives from EU legislation will remain applicable until any changes are made. The regulator stated that will be a matter for government and parliament.
Mr Lodge stated: “EU regulation per se will surely fall away the day we leave the EU. Can you give us an idea of how the FCA will deal with that?”
Mr Bailey said the parts of EU regulation that have been implemented in UK law will remain.
As for direct EU regulation which has not been implemented in UK law, the government will have to address this.
When asked what impact Brexit would have on the workload and costs of the FCA, Mr Bailey added: “It is very much in the world of suck it and see at the moment.”
His comments came after Financial Adviser reported Britain’s decision to exit the European Union was unlikely to change the need for financial advisers to meet Mifid II requirements and the demands of other rules generated by Brussels.
Mark Spiers, head of wealth management and banks at regulatory consultants Bovill, said Mifid II, which is due to come into effect in January 2018, was very much the brainchild of the FCA.
“One of the prime movers behind Mifid II was the FCA so it doesn’t really matter if we leave the EU tomorrow or today - it is coming in come what way,” he commented.