Any financial services firm hoping for a reduction in their regulatory obligations after the UK exits the European Union may be disappointed, if comments by the regulator’s executive director of strategy and competition are anything to go by.
In an appearance before the House of Lords European Union justice sub-committee in early October 2017, Christopher Woolard commented:
“This is an international system we are talking about here. If you look at where the majority of business is done, it is in pretty rough enforcement jurisdictions.
“What looks like a good plan to deregulate in certain circumstances comes back to bite people years later when the compensation scheme kicks in.
“This is a system of international standards where money tends to have a flight to quality.”
Mr Woolard went on to speak about the regulatory regime in Singapore, widely perceived to be a more lenient system, by saying:
“This phrase of ‘Singapore-on-Thames’ gets used a lot and clearly the Singaporean authorities have an approach to how they attract international business but the thing I have learnt when dealing with their regulator is that their system of regulation is pretty much the same standard you would find in the US or Hong Kong or here.
“Of course, there are differences in the nuances between different systems but I don’t think there is a really established financial services regulator around the world who would argue that having a low standard of consumer protection is a good way of having a solid basis for having an industry to go forwards.”
His next remarks suggested that he believes many of the measures introduced by the EU would have been necessary in any case, when he commented:
“The majority of EU regulations around financial services is often something that if it didn’t exist, we would want to have something similar anyway.
“Clearly when that is developed in the context of 28 member states there will be pieces we would deal with in a different way but the underlying principle will be the same.”
His comments were echoed the following day by Chancellor of the Exchequer Philip Hammond MP, who told the Treasury Select Committee that he believed the UK would require “enhanced equivalence” with the European Union regulatory regime. He rejected suggestions that the UK should seek regulatory equivalence with the United States, where President Trump is thought to favour reducing the regulatory burden for financial services.
One example of EU legislation that UK firms will need to comply with is Part II of the Markets in Financial Instruments Directive (MifID II). It comes into force in January 2018, when its implications for advisory firms could be far reaching, and could have an impact in areas such as:
- Resolution of conflicts of interest
- Complaints resolution
- Handling of client assets
- Inducements and payments to third parties
- Suitability of advice
- Provision of information to clients
- Maintaining records of client meetings
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.