05 February 2018

Financial Times: FCA chief urges EU regulator pact on transition

The head of the UK’s financial regulator has called on other European watchdogs to support a Brexit transition period by signing a memorandum of understanding that gives City of London companies time to adjust to Britain’s exit from the EU.

Andrew Bailey, chief executive of the Financial Conduct Authority, said such a regulatory pact would be part of a “co-ordinated solution” that includes a commitment by political leaders to a transition period that gives the financial services sector some breathing space on Brexit.

“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 to be in place,” Mr Bailey told a dinner in London on Monday.

“An MoU would be a means for the regulators to be transparent in the more practical issues around implementation, and thus that we are committed to such a period of time being available.”

Mr Bailey challenged EU authorities’ claim that a trade deal with the UK could not include financial services.

He said Brussels proposed exactly such a deal in the abortive talks between the EU and US about a trade liberalisation agreement known as the Transatlantic Trade and Investment Partnership.

“The European Commission drafted a TTIP chapter on financial services,” said Mr Bailey. “So, it turns out that it can be done, and moreover there is an extant proposal from the EU which could be a good starting point for UK-EU mutual recognition.”

The comments from Mr Bailey, a contender to succeed Mark Carney as governor of the Bank of England, represent the latest effort by a British financial regulator to smooth the path to secure more time for companies to adjust to Brexit.

Sam Woods, head of the BoE’s Prudential Regulation Authority said recently that the central bank would back a Brexit transition period through a “regulatory underpinning” even if such an agreement were not legally finalised. [...]

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