Damian Fantato 

Post-Brexit life poses hard questions on rules

Damian Fantato

Damian Fantato

Britain was supposed to be entering its third month of life outside the EU this week.

But like all the best-laid plans, this did not come to pass. We could spend the entirety of an edition of Financial Adviser debating why that was and who should carry the blame for it.

Will Britain leave the EU? The one lesson of the past three years is that nothing is to be taken for granted one way or the other.

But should Brexit come to pass – in October or later – then the big question facing financial advisers is what will happen to regulation.

An example of the slightly chaotic intersection between EU and UK regulation has been seen this week, with advisers claiming aspects of Mifid II’s 10 per cent drop rule – which requires clients to be informed if their portfolio falls by this amount – make it awkward to comply with the Financial Conduct Authority’s desire for advisers to use more than one platform.

The easy answer to this conundrum will be to say that after Brexit the UK will enter a bright new future where it can make its own rules and continue trading around the world.

But while advisers might not care one way or the other, since very few export their services across borders, the big beasts of the financial services sector will want easy trade and the regulatory alignment that comes with it – and it seems likely the UK will have to choose between Europe and America.

However, the Trump administration’s bid to dismantle the fiduciary rule shows the US may be heading in the opposite direction to the UK and Europe in terms of advice standards. 

As awkward as it might be, perhaps it is better to stick with the devil you know.

damian.fantato@ft.com