CityUK report on Brexit and financial services sector

On 8 May 2017, TheCityUK published a report on the legal impact of the UK's exit from the EU on the UK-based financial services sector.

THERE IS A USEFUL CHAPTER ON IFA SERVICES.  But The difficulties IFAs face under the current regime to get permission to trade abroad from the FCA is not addressed.  Separate permission is currently required for Insurnance and investment business and for each AR firm as well as the principal firm. 

Although under EEA rules only a notification is required, in fact separate permission is currently required for Insurance and investment business as well as for each AR firm plus the principal firm.  Add into this mix the confusion between setting up a branch or cross border services, and the lack of clarity around whether or not an email to your friend in Meribel counts as trading in France, and, you must be admit,  the brexiteers have a point

The report's aim is to assess the extent of loss to financial services sector from Brexit.

• The closure of businesses based in the UK.
• The need to seek separate authorisations in the EU.
• The transfer of people and systems around the EU.
• The use of EU-based market infrastructure in place of UK-based infrastructure. 

They key fact the investment industry want answered is this 

"can we continue to run EEA funds, based in EEA (Luxembourg) from the UK?"

This report assumes that the UK will become a third country and that no bilateral arrangements will be agreed between the UK and the EU. It divides the UK financial services sector into 11 business lines and considers the potential impact on each both where the UK obtains equivalence and where it doesn't.   There is also commentary on discussions held to date.  Here's a summary

• Everyone seems to want an orderly exit.
• Firms are seeking to obtain an implementation period beyond the initial two-year period for negotiations. The general view is that the two-year period is not long enough. 
• Grandfathering rights will be important for UK banks 
• Continuity of existing contracts with EU counterparties, continued access to EU staff and the ability to receive and transfer personal data cross border was also considered.

The report follows on from a report on the same issue, written by Oliver Wyman, that TheCityUK published in October 2016.

For a selection of useful documents please see our regularly updated Document Library - Document Library