Risk & Compliance

Regulator Wants Finserv in Brexit Trade Deal

"A commitment to continued open markets is at the heart of the future," says the head of the U.K.'s financial watchdog.
Matthew HellerFebruary 6, 2018

The head of Britain’s financial watchdog has called for financial services to be included in a post-Brexit free trade agreement between the U.K. and EU, saying a commitment to continued open markets is vital to the industry’s future.

Several key EU politicians — including the bloc’s chief negotiator Michel Barnier — have ruled out a deal for the City of London’s finance industry. French President Emmanuel Macron said last month that the sector cannot expect to negotiate special access after Brexit.

But in a speech on Monday, Andrew Bailey, chief executive of the Financial Conduct Authority, said a change to the status quo in financial markets after Brexit would mean closing market access, which would be to the detriment of the remaining EU member states.

“It would also be a decision to disconnect the EU from the benefits of global markets,” he added.

EU officials are concerned that a deal with “mutual recognition of regulatory standards” would give Britain benefits in financial services that only membership of the EU should bring. But Bailey said “a commitment to continued open markets is at the heart of the future” and to that end, mutual recognition is needed.

“Andrew Bailey is absolutely right to underline the importance of a Brexit deal with mutual regulatory recognition at its heart,” Miles Celic, head of lobby group TheCityUK, said in response to the speech.

Bailey noted that the EU proposed such an arrangement to the United States and the bloc is considering a mutual access deal in fisheries with Britain after Brexit. The Transatlantic Trade and Investment Partnership has been put on hold by President Donald Trump took office, who has prioritized an “America First” trade policy.

“In the approach the EU took to the TTIP negotiations with the U.S. … the EU pursued a trade agreement which included provision for financial services,” Bailey said.

“The U.S. wasn’t ready for such a move, but this doesn’t take away from the fact that to its credit, the EU proposed such an arrangement,” he said.