FCA chief tells May to get City Brexit deal done by March

FCA chief tells May to get City Brexit deal done by March

Political leaders should be able to agree a post-Brexit deal for financial services by the end of March, according to Andrew Bailey, chief executive of the Financial Conduct Authority (FCA).

Mr Bailey said his conversations with regulators in other European Union jurisdictions have shown him that there is an interest “on both sides” for an agreement to be reached that allows financial services businesses to operate within each others jurisdictions.

The regulator's chief said: “First, it is not sensible to imagine material regulatory divergence, especially in wholesale financial markets. It is a false concept. Markets are global and we cannot in practice diverge much in terms of regulatory outcomes, and regulatory arbitrage is not an allowable ground for competition.”

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He compared trying to stop the free movement of capital to trying to stop fish swimming across borders.

Mr Bailey said: “We need by the end of March a joint commitment by the political authorities to a well-defined Implementation or transition period which will create the space and support for the regulators to work with firms and political authorities to put practical solutions into place.

"The benefits of a transitional period go beyond the need for time to deal effectively with these operational issues, but the latter are nonetheless important.”  

Mr Bailey said if political leaders do come to an agreement, “I hope that the respective regulators can put in place a memorandum of understanding to give effect to a stable and orderly transition which would acknowledge that firms are planning for a transition period".

This would be a means for the regulators to be transparent in the more practical issues around implementation, he said.

"Thus that we are committed to such a period of time being available," Mr Bailey said.

The FCA chief said an important step has been taken by introducing the plan that would use interim permissions as a means to deal with the risk that firms are left without authorisations without due warning.

"We think this is an important safeguard and a sensible way to underpin financial stability. I am grateful to the government for committing to introduce the secondary legislation needed to put such an arrangement in place,” he said.