Britain would be in a “very difficult” world if it had no influence over financial service regulations after leaving the European Union, Andrew Bailey has said.
Speaking to the Treasury select committee this morning, the chief executive of the Financial Conduct Authority set out some guidelines for what he thought the UK should aim for in its Brexit negotiations.
He said: “The more you become a taker of standards, the less influence you have over standards.
“That is a difficult place to be for a major financial market like the UK.
“I have a preference for a system where we, as a regulator, have more influence over standards.
“A world in which we were a taker of standard would be very difficult.”
The FCA’s chairman, John Griffith Jones, told the committee there would probably have to be some sort of transitional arrangement.
He said: “We cannot tell people what the deal is going to be on 31 March 2019 so that leads to some sort of transitional provision.
Mr Griffith Jones said: “It is clearly the case that the sooner the better (Brexit) and if I was running one of the firms, in the absence of understanding what was happening I would have a contingency plan.”
Mr Bailey added: “They should have a contingency plan because we ask them to have a contingency plan for every other scenario and event that could pose a risk for them, so it would be inconsistent not to have one here.”
He also addressed the claims that some firms would be tempted away from the UK by other regulators who may be more “active”.
He said: “The disadvantage for the UK is we can’t tell you what the future is. It would be quite a hard pitch because what is the future? I’m afraid that’s over to you.
“We have set out our own principles. I hope they’re helpful. I’m not going to enter into the political mechanisms.”