08 May 2017

TheCityUK: The legal impact of Brexit on the UK-based financial services sector

The individual conclusions are discussed in detail in chapter 6 of this report, but in summary:

(a) the view of many in the UK-based financial services sector is that the immediate focus for regulators and the Government needs to be on acquiring and transforming the acquis communautaire into UK law, and securing an orderly Brexit and an effective transition to a new UK-EU relationship. Brexit may however also provide an opportunity for the UK to reconsider its regulatory approach so that the framework is more tailored to the specifics of the UK market. Whilst the financial services sector is not seeking a “bonfire of regulation”, some feel that this re-framing should be considered in parallel with the exit agreement negotiations. In the past, UK regulators and legislators have responded swiftly to international regulatory developments;

(b) firms are seeking to secure an implementation period beyond the initial two-year period for negotiations. The general view across the financial services sector is that the two-year negotiation period will not be a sufficient time to negotiate the UK’s exit arrangement, for the UK Government to redefine its ongoing relationship with the EU or for firms satisfactorily to effect any required reorganisation or restructuring. A longer implementation period will be of mutual benefit to both the EU and the UK;

(c) there are a number of areas where securing “grandfathering” rights is important for firms, not least so that firms can continue to service existing relationships with EU clients following Brexit;

(d) ensuring continuity of existing contractual arrangements is important across the financial services sector;

(e) continued access to talent after Brexit is essential to the ongoing success of the UK-based financial services sector and a solution needs to be found to ensure such access can continue in the future; and

(f) firms rely on the ability to transfer and use personal data freely. Ensuring that they can receive and transfer personal data is a priority.

Full report

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