FCA on Brexit: It is going to be tough, it might be a bit more expensive…

The UK departure from the European Union is likely to be a key topic for years to come, with the financial services sector heavily affected by this process. Some interesting comments in this respect have been made by Chris Woolard, Executive Director of Strategy and Competition, Financial Conduct Authority, who on October 10, 2017, gave evidence before the EU Justice Sub-Committee.

The comments (the full recording may be viewed on UK Parliament TV) were made as the Sub-Committee continues with its inquiry into Brexit: consumer protection rights.

Asked about any worries about enforcement, Mr Woolard replied that in terms of the UK’s own enforcement, it’s much of “business as usual”. However, in a broader context, the situation is mixed.

“If we look across the full range of enforcement, some of that is underpinned by European level arrangements, particularly around competition law, but an awful lot of it is already dealt with essentially bilaterally between ourselves and other regulators operating in Europe or operating elsewhere in the world, so it’s a bit of a mixed picture”, he said.

Mr Woolard made a specific clarification about ESMA and its CFD regulations. The FCA had delayed making the new CFD rules final, attributing its decision to a statement by the European Securities and Markets Authority (ESMA) on its consideration of product intervention measures under Article 40 of the Markets in Financial Instruments Regulation (MiFIR).

On October 10^th, Mr Woolard said:

“A lot of the arrangements that are in place at the moment do not rely ultimately on European underpinning. But there are certain places. So, for example, if we look at ESMA, where approaches are being discussed at the moment around things like contracts for difference, where we do see some significant issues in the market, and where, were there to be a European level action in that space, we would absolutely want that to be a part of the UK regime in a post-Brexit scenario”.

Apparently, this is a piece of legislation that the UK authorities would like to onshore as the Brexit process progresses.

Concerning the financial, budgetary aspect of this transition, Mr Woolard faced the question of whether the FCA is resourced enough to the job of dealing robustly with the emerging challenges in this process of leaving the European Union.

“This is a very very significant challenge for us as an organization. We need to scale up significantly the amount of resource we are spending on Brexit”, Mr Woolard said.

“The short version of this is: It is going to be tough, it might be a bit more expensive…” – Chris Woolard, Executive Director of Strategy and Competition, FCA.