Nausicaa Delfas, Executive Director of International at the Financial Conduct Authority (FCA) highlighted the need for regulators in different parts of the world to work together in a January 2020 speech.
However, her speech was entitled “global regulation, local solutions” as she explained that regulatory solutions often need to be tailored to the needs of individual countries, even if co-operation between different national regulators is often required to ensure firms can compete on a level playing field. On this subject, Ms Delfas commented that “local solutions can cause higher compliance costs for firms operating internationally” as firms try to put in place systems that will ensure they comply with the differing requirements of more than one regulator.
Ms Delfas, who the media often refer to as the FCA’s ‘Brexit chief’, was speaking at the London offices of law firm Bryan Cave Leighton Paisner. The speech was delivered just eight days before the official Brexit date, but the FCA director clarified that it will be largely business as usual for the UK financial services industry until at least the end of this year. The passporting system – which allows firms to trade throughout the European Economic Area without the need to obtain authorisation from every national regulator – remains in force. All European Union regulation still applies in the UK, as do all consumer rights and protections that were introduced by the EU.
Ms Delfas then advised firms to look out for announcements and guidance from the FCA, as in due course it will become clear exactly what the regulatory position will be in 2021 and beyond. She noted that the Political Declaration that accompanies the EU Withdrawal Agreement includes “commitments to conduct mutual equivalence assessments by mid-2020.” However, there is no guarantee that the UK and the EU will have finalised a comprehensive free trade deal by the end of this year, and even if a deal is struck, it may not include financial services, with Ms Delfas warning that:
“Firms still need to ensure they are prepared for a range of scenarios that may happen at the end of 2020 – and this includes the scenario in which the activities they conduct might not be covered by agreements reached between the UK and the EU.”
EU requirements have been introduced in the UK over the years and so on Brexit day the regulatory rulebooks of the EU and the UK will be equivalent. The question that remains is how far these two rulebooks will diverge in the future. The FCA director commented that, even if the regulations themselves might be different in the future, the outcomes they are intended to achieve may still be similar. Ms Delfas noted that:
“In the Political Declaration, both the UK and the EU have committed to outcomes preserving financial stability, market integrity, investor and consumer protection and fair competition”
and then that:
“In the future, it is not about whether we have identical rules, but whether they achieve common substantive outcomes.”
Ms Delfas then mentioned recent co-operation with regulators in Singapore, Japan and the United States, and highlighted that this means, whatever the final Brexit scenario is, the FCA will continue to co-operate with the EU and with national regulators across Europe.
Even though the UK will cease to be an EU member on January 31 at 11pm GMT, in practice this will only herald the start of a new phase of negotiations between the UK and EU. Ms Delfas concluded her speech by saying:
“Without doubt, we face another interesting year ahead. We in the FCA are preparing ourselves for all scenarios. We are ready to adapt to the new environment post Brexit.”
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