In a 31-page impact assessment regarding the UK’s withdrawal from the EU in March next year, the FCA said the country could gain the freedom to “tailor financial services rules to ensure high standards that meet the needs of its domestic market and consumers” in the medium term.
However, it also acknowledged that any changes post-Brexit “would need to be compatible with broader international standards and take account of the type of EU-UK relationship we may have in future”.
The FCA stated that proceeding with the draft withdrawal agreement – struck between UK and EU negotiators on 14 November – was “preferable” to a ‘no-deal’ scenario. However, as part of the agreement the FCA would be barred from participating in the European Securities and Markets Authority’s (ESMA) decision-making processes.
There were dozens of pieces of legislation being discussed or developed by the EU that could affect the UK after Brexit or during the planned transition period – but the FCA would not be able to participate in discussions unless invited by ESMA
“During the implementation period, the UK will no longer be part of EU decision-making structures, nor will it be represented in the EU institutions, agencies and bodies,” the FCA said. “Some participation may be possible, but the EU and UK have not yet agreed how this would work in practice. In our view, there is time for this issue to be resolved.
“We believe there is a strong case for continued close co-operation given the size of the UK’s financial services sector and the importance the UK’s approach to applying EU financial services law has for the rest of the EU.”
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