The regulator has called on advisers to “ensure they are prepared” for the UK’s departure from the EU in light of last week’s election result.
The Conservative party gained a parliamentary majority of 80 in last Thursday’s general election.
Prime Minister Boris Johnson had continuously promised to “get Brexit done” and, speaking outside Downing Street after the election, pledged to honour that promise by January 31.
The Financial Conduct Authority has been clear that it “takes no view on the substance” of Brexit, but in light of last week’s results, called on advisers to continue in their preparations for the UK’s departure from the EU.
An FCA spokesperson told FTAdviser: “Following the result of the general election, and pending further developments, financial advisers should continue to ensure they are prepared.”
The FCA has already struck a deal with EU regulators to ensure cross-border co-operation in the event of a no-deal Brexit, but earlier this year chief executive Andrew Bailey admitted the drawn-out process was beginning to drain the regulator’s resources.
Don Scott, technical director at compliance business TCC, urged advisers to revisit their plans for Brexit in light of the election result.
Mr Scott said: “While January 31, 2020 is a big deadline in the minds of many, the real crunch will come when the transition period ends a year from now, at the end of December 2020 – a date that the prime minister has repeatedly insisted will not be pushed back.
“To get into a position where you’re ready for the UK leaving the EU, advisers need to revisit their plans for Brexit.
“Most importantly, consider how you will service EU clients with investments in the UK, and UK clients with EU investments.”
Mr Scott said advisers should give particular attention to the clarity around client contracts, the requirements of specific clients’ portfolios and access to EU markets after the transition period.
He added: “Also consider product suitability and appropriate contract continuity is in place for clients.
“For those with trading activities then the overall impact on capital markets will also need to be assessed when there is greater clarity on EU access to trading venues and OTC clearing.”
Simon Harrington, senior policy adviser at adviser trade body Pimfa, said Brexit was a good opportunity to shape future industry legislation, but also warned some advisers should be prepared for the “inevitable” market volatility that will follow.
He said: “While the UK’s departure from the EU may now be all but certain, the final terms of it certainly are not.
“We would encourage advisers – if they haven’t already – to consider the options for handling clients who are resident in the EU in the event of no deal after transition and the inevitable market volatility this will engender.
“More broadly, this community as a whole should see Brexit – but more specifically, the legislative blockage that it will uncork – as an opportunity to shape financial services legislation.”
Mr Harrington said most advisers with UK-domiciled clients would be “largely unaffected” by Brexit and those with EU-based clients will have time to alter business arrangements in the transition period, which runs until the end of 2020.
On Tuesday, December 17, it emerged Mr Johnson would publish Brexit legislation that would legally prohibit him from extending this period beyond December 2020.
David Scott, of Leeds-based advice company Andrews Gwynne, said the biggest change at his business in preparation for Brexit had been in its investment strategy.
Mr Scott said: “In terms of running our business or the way we communicate with clients, we have not done anything differently.
“I think our clients, like everybody else, are fed up to the back teeth with it all.
“The only way Brexit has impacted is in terms of our investment strategy. We think Brexit will lead to an interest rate cut in the UK, and so have bought more infrastructure funds for clients.”
rachel.mortimer@ft.com, additional reporting by David Thorpe
