Andrew Bailey, the chief executive of the Financial Conduct Authority, said that the plans around so-called delegation went against global norms and could restrict the flow of financial services.
“The truth is that delegation is a well-established global norm, underpinned by strong standards and regulatory co-operation. It is not dependent on EU membership. There is no reason to disrupt a system that clearly works effectively,” Mr Bailey told an asset-management audience in London. “I do take a strong position that Brexit does not need to be an excuse to restrict trade in financial services, and that to do so would be a mistake for all sides.”
The rules around so-called delegation threaten to be a lightning rod in the negotiations about how to regulate financial services after the UK leaves the EU. Delegation deals with the fact that most asset managers are registered in countries such as Ireland and Luxembourg but most of the actual business is done in London.
The Paris-based European Securities and Markets Authority said last year that it would not accept “letterbox” entities that employ few people after Brexit, and that national regulators should take a tougher line on policing the asset management sector. Some saw the opinion as Esma clarifying existing rules but others warned of a land-grab by countries including France.
In the same speech, Mr Bailey also said he was concerned about new EU rules about disclosure obligations, known as PRIIPS.
He said: “It carries a risk that it is leading to literally accurate disclosure which is not providing useful context, and there is evidence of funds, for instance from the US, are withdrawing from Europe to avoid the burden.”
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