Treasury Committee launches inquiry into post-Brexit future of UK financial services

Maria Nikolova

The inquiry will examine whether the UK should maintain the current regulatory barriers that apply to third countries.

The UK Treasury Committee has earlier today launched a new inquiry into the future of the UK’s financial services once the UK has left the EU.

The Committee aims to examine what the Government’s financial services priorities should be when it negotiates the UK’s future trading relationship with the EU and third countries. The inquiry will also look at how the UK’s financial services sector can take advantage of the UK’s new trading environment with the rest of the world, and whether the UK should maintain the current regulatory barriers that apply to third countries.

Let’s recall that, in its latest regulation round-up, the Financial Conduct Authority (FCA) includes a notice on Brexit, in which the regulator advised firms to continue to make their contingency plans and think about how their consumers might be affected by the UK leaving the EU.

In the meantime, the notification window for the temporary permissions regime opened on January 7, 2019. It is set to close on March 28, 2019. The regime will allow EEA-based firms currently passporting into the UK to continue new and existing regulated business within the scope of their current permissions in the UK for a limited period, while they seek full FCA authorisation, if the UK leaves the EU on exit day without an implementation period in place. It will also allow EEA-domiciled investment funds that market in the UK under a passport to continue temporarily marketing in the UK.

The FCA has also set out proposals to implement the financial services contracts regime (FSCR) so that EEA firms can fulfil their existing contractual obligations in the UK.

Commenting on the launch of the new inquiry, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:

“Brexit will have a significant and long-lasting impact on the financial services sector, including the insurance, retail banking and asset management sectors, in the UK, the EU, and potentially the rest of the world.

“The UK may converge, seek equivalence, or diverge from the EU. As part of our new inquiry, the Treasury Committee will examine the risks and rewards of each of these choices”, she added.

The Committee will also seek to determine whether it would be in the long-term interests of the UK to align closely with EU financial rules, or to forgo financial services trade with the EU and pursue trade with other third countries.

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