FCA boss Andrew Bailey calls for ‘assurance’ over Brexit transition
The chief executive urged UK and EU regulators to draw up a Memorandum of Understanding to underpin a “stable and orderly” change.
The boss of Britain’s financial watchdog has urged the Government to hand firms, markets and regulators “much-needed assurance” over the Brexit transition period.
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Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has called on UK and EU regulators to send companies a clear signal of their commitment to the process by drawing up a memorandum of understanding (MoU) to underpin a “stable and orderly” change.
The UK and the European Union have already agreed to honour a two-year transition period to give businesses and organisations the chance to avoid disruption and prepare for a new status quo.
However, the two parties remain divided over what the “implementation phase” should look like, with Britain wanting to maintain full-membership rights and the EU wanting to strip the UK of its decision-making powers.
Speaking during the Future of the City dinner, Mr Bailey said he could not “stress too much that we need these arrangements in place”.
He said: “The best solutions are mutually agreed and enacted so that they are consistent.
“And to achieve this, we need by the end of March a joint commitment by the political authorities to a well-defined implementation or transition period which will create the space and support for the regulators to work with firms and political authorities to put practical solutions into place.
“It can be done, and I think there is a growing consensus on both sides that it must be done. I sense this view increasingly taking hold from my discussions around Europe.
“But it needs support in the form of a timely commitment to a transition agreement which will allow the regulators to get on and tackle these issues.
“A joint agreement to get on with this is in the interest of everyone involved. And it will give much-needed assurance to firms and markets as well as regulators.”
Mr Bailey offered further warnings of the potential risks posed to the financial system, and the data-sharing relationship between Britain and the EU, if a regulatory framework is not in place on the first day of Brexit.
He said around £26 trillion worth of over-the-counter derivative contracts, six million UK and 30 million EU insurance policy holders would no longer be serviceable, while holding and sharing UK and EU data could breach national law.
Mr Bailey added: “As part of this co-ordinated solution, I hope that the respective regulators can put in place a memorandum of understanding to give effect to a stable and orderly transition which would acknowledge that firms are planning for a transition period to be in place.
“An MoU would be a means for the regulators to be transparent in the more practical issues around implementation, and thus that we are committed to such a period of time being available.”
The speech comes as the EU’s chief negotiator Michel Barnier travelled to London on Monday for talks with Prime Minister Theresa May and Brexit Secretary David Davis.
Mr Barnier said he would “respect the red lines” set out by Mrs May, but the UK must also “respect the rules of the union”.