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27 January 2018

Financial services industry needs clarity on post-Brexit market access, says Committee

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The EU Financial Affairs Sub-Committee reports on their inquiry into Brexit: the future of financial regulation and supervision. Graham Bishop took part in the inquiry as a Witness.

The report highlights the risks of market fragmentation and instability if the UK and EU cannot agree a deal on market access once the UK has left the bloc. The Government must urgently clarify what outcome it wants from phase two of Brexit negotiations and on transitional arrangements, or firms will be forced to activate costly and potentially irreversible contingency plans. [...]

Key findings

  • International standards and EU law has shaped the UK's regulation of financial services. The UK heavily influenced these and it must continue to adhere to international standards and find a way to shape them in future, especially if there is a risk of them being undermined by other states.
  • Post-crisis reforms have promoted financial stability and the Government should continue to advocate these reforms, especially if faced with initiatives by the EU that would lead to market fragmentation and a rowing back on the post-crisis commitments, such as current proposals on potential central counterparty (CCP) relocation.
  • The translation of EU regulation into domestic law will need delicate handling by the Government. Some rules will need to be enshrined in statute. However, it may be more appropriate in some areas for regulators to issue guidance and set standards. Any future regulatory regime will likely result in a significant increase in the powers of domestic regulators. It is vital that Brexit, in transferring powers to domestic regulators, should not result in an unintended deficit in democratic scrutiny and accountability. [...]

Full press release

© House of Lords

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