Andrew Bailey, CEO of FCA, opines on Brexit
Chair of the FCA gives a positive view of financial services post BrexitChair of the FCA gives a positive view of financial services post Brexit.
In a speech today, Andrew Bailey, Chief Executive of the Financial Conduct Authority, told his audience that Brexit need not lead to restrictions in trade for the financial services community. In his view, the UK does not have to be a member of the single market to benefit from an open market in financial services. However, he notes that transitional arrangements should be put in place to enable a smooth path to ‘a post-Brexit world’.
Speaking at Thomson Reuters, Bailey said, “Brexit should not be conflated with whether or not to have open global financial markets and trade in financial services.”
He went on to outline what the FCA is doing in relation to Brexit:
- providing technical advice to the government;
- working with regulated companies to help them understand the implications;
- going through all EU legislation that the FCA oversees to ensure it is transferred into UK law in a clear and certain way.
In Bailey’s view, financial services need a global open market which operates on the basis of ‘same risk, same requirements’ and he outlined the progress that has been made through the G20 and broader global bodies including the Financial Stability Board (FSB) and the International Organisation of Securities Commissions (IOSCO). He also pointed to the opinion of the IMF in its Financial System Stability Assessment of the UK published last year that ‘financial stability in the UK is a global public good’.
Bailey made the further point that whereas the EU has tended to commence with detailed rules with a view to harmonisation, the UK style of financial regulation has always been principles-based. This creates a climate where market access can be based on equivalence and mutual recognition – and Bailey stresses that the UK has always maintained the highest standards in financial services regulation with clear public interest requirements at their root.
He spells out four permanent features that should form the basis of future cooperation with the EU: comparability of rules, but not exact mirroring; supervisory co-ordination; exchange of information; and a mechanism to deal with differences.
In short, Bailey’s stance is clear: ‘open markets in financial services and free trade can exist safely without common detailed rules and shared regulatory institutions. Consistent outcomes of regulation are what matters.’
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