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Britain is expected to hold a referendum on its membership of the EU later this year, and Parliament's Treasury Select Committee is studying the implications for the financial services industry.Three heads of financial services associations told lawmakers that Britain leaving the EU would probably disrupt the industry, although they noted that members of their trade bodies had a range views on whether Britain should stay in the EU.
The "significant benefits" of membership outweigh the costs for investors in mutual funds, Guy Sears, interim chief executive of the Investment Association (IA), told the committee. Mutual funds are pots of money managed on behalf of investors for their retirement.
IA members manage 5.5 trillion pounds or 37 percent of European fund assets, more than France, Germany and Italy combined, Sears said. Over a trillion pounds of that is from EU-based customers in Britain, who might pull out if Britain leaves the EU, a move dubbed "Brexit".
Leaving the EU would complicate doing business without significantly cutting compliance costs, Sears said. Under Brexit, British financial firms could only access EU markets if their rules are equivalent to EU standards.
"Regulation does control your access to markets," Sears said. "Being subject to a regulation without an ability to influence it is clearly going to be less than optimal."
Customers of funds based on the continent but managed from London or Edinburgh might review these arrangements after Brexit, Sears said. Asset managers in Britain would consider expanding in Frankfurt rather than London, he said. [...]